We talk and think about money every single day. Either we are earning money in our jobs, spending money on ourselves, friends or family, researching the best ways to invest our money, or even thinking about our next job and how we will earn from it.
Given how much time we spend thinking about money (but mostly because it's in our name), Muslim Money Experts examine what money really is, and what our attitude as Muslims should be towards it.
So what is money?
Money is generally accepted as a medium of exchange.
This means that it allows people to trade and exchange goods or services as well as also playing an essential role by acting as a unit of account, allowing you to use money to assign prices and value to things.
In the past, we’ve used commodities such as gold and silver as ‘money’. Over time, this began to change due to the physical burdens of using them day-to-day.
Carrying sacks of gold may seem like a cool idea in theory, but carrying it every day becomes very heavy and very expensive to store safely.
So instead, we began to store our gold with ‘goldsmiths’ who issued receipts in return. Now we could use these receipts (think bank notes in today’s world) to trade with whomever we liked. The seller could then redeem these receipts for physical gold whenever they wanted.
To cut a long story short, over time, these receipts became tradable and their relationship with gold was severed. This gave rise to all the major currencies of the world that we know today, such as the US dollar or the British pound sterling.
What would we do without money?
Without money, humans would need to use a barter economy. This is where goods and services are directly exchanged.
For example, if Fatima, who sold potatoes, wanted to buy bread, she would need to find a bread-seller and trade some of her potatoes for their bread. Similarly, if Ahmed, a carpenter, wanted to buy milk, he would have to find a milk-seller who needed carpentry work.
Whilst this type of economy helps to facilitate basic trade, there are a few disadvantages to having a barter economy:
- How do you assign value?
When trading items directly, it is difficult to compare the relative value of each of these items. As silly as it sounds, the debate would quickly become ‘how many grams of wheat is equivalent to 1 egg.’
Economically, this creates inefficient pricing and most importantly for us - could lead us on a one-way path to Riba as commented in the following hadith:
The Prophet ﷺ cautioned Bilal (RA) from trading dates of an inferior quality to dates of a superior quality. Instead, he instructed him to sell the inferior dates for money before buying the superior dates.
Once Bilal brought Barni (i.e. a kind of dates) to the Prophet (ﷺ) and the Prophet (ﷺ) asked him, "From where have you brought these?" Bilal replied, "I had some inferior type of dates and exchanged two Sas of it for one Sa of Barni dates in order to give it to the Prophet; to eat." Thereupon the Prophet (ﷺ) said, "Beware! Beware! This is definitely Riba (usury)! This is definitely Riba (Usury)! Don't do so, but if you want to buy (a superior kind of dates) sell the inferior dates for money and then buy the superior kind of dates with that money." (Sahih al-Bukhari 2312)
2. How would we even store value?
In a barter economy, storing value in the long term is challenging. Not all goods or services retain value.
For example, Fatima, the potato seller, must sell her potatoes before they go bad. Ahmed, the carpenter, can only work if he is physically able to do so. Without money to store value, Fatima and Ahmed would have to find alternative assets they can store value in (e.g. land).
What is the Islamic view on money?
So now that we’ve established that we need some form of money for society to function properly, here comes the juicy part! The Islamic perspective!
In Islam, money functions strictly as a medium of exchange, meaning it should only be used as a currency to buy the things we want and need.
Money has no foundational value in of itself, so you cannot charge for its use like other assets. Sadly this practice is widespread in the society we live in today, in the form of loans (but more about this in another article).
So what kind of money does Islam permit?
Firstly, The Quran has mentioned gold and silver explicitly.
“The enjoyment of worldly desires—women, children, treasures of gold and silver, fine horses, cattle, and fertile land—has been made appealing to people. These are the pleasures of this worldly life, but with Allah is the finest destination.” (Quran 3:14)
The Prophet Muhammad ﷺ himself narrated financial rulings using gold and silver (and it is also a reference point for Zakat):
Allah's Messenger (ﷺ) said, "Don't sell gold for gold unless equal in weight, nor silver for silver unless equal in weight, but you could sell gold for silver or silver for gold as you like." (Sahih al-Bukhari 2175)
However, this doesn’t mean that money can only be gold and silver. The great scholar Ibn Taymiyyah, stated that there is no specific definition of what constitutes money from the Shariah. Instead, this has been left to the customary practice of the people.
For example, during the Mamluk dynasty, Muslims used copper as currency for small transactions.
The rules of Shariah on Money
Whilst Islam generally allows people to decide what specific currency to use, it imposes guidelines for how money should be used. These guidelines exist due to the importance of money to the economy. The economies health depends on the soundness of the money supply, which is why it is pivotal to protect money from corruption.
Here are three key guidelines on how money should be used in Islam:
1. Money can only be a medium of exchange
Money can only be used as a measure of determining the value of other assets. This means it cannot, under any circumstances, be used as a commodity to trade with (i.e. trading $1000 today for $1250 in 6 months, this is essentially what a loan is).
The famous scholar Imam Ibn al-Qayyim once said:
“When money begins to be treated as a commodity and becomes the objective of transactions, the entire (economic) system will become corrupted and in crisis.”
2. Money should circulate freely
There are certain verses in the Qur’an that prohibit the hoarding and monopolization of money. This is done to create an equal society where everyone gets their fair share.
“Give good news of a painful torment to those who hoard gold and silver and do not spend it in Allah’s cause.” (Quran 9:34)
“As for gains granted by Allah to His Messenger from the people of ˹other˺ lands, they are for Allah and the Messenger, his close relatives, orphans, the poor, and needy travellers so that wealth may not merely circulate among your rich.” (Quran 59:7)
We are encouraged to circulate wealth. This allows everyone to participate economically and creates a society that is based on real activity, charity and trade. As per the following verse, even the poor are encouraged to spend whatever they can.
“Let a man of wealth spend from his wealth, and he whose provision is restricted - let him spend from what Allah has given him.” (Quran 65:7)
Unfortunately, its a stark difference if we were to compare the goal of the Islamic economy to the society we are in now. Oxfam, an international charity noted an alarming statistic in a recent report:
''Since 2020, the richest 1% have captured almost two-thirds of all new wealth – nearly twice as much money as the bottom 99% of the world’s population''
3. Money shouldn't be debased
Debasement refers to the deliberate reduction in the value of money.
In the past, when gold and silver were the world's major currencies, coin clipping was a common practice. This was when small amounts of metal were removed from the coins to produce more or to use the metal for other purposes.
The indirect effect of this though - each coin was now worth less than it had been originally.
The Shariah would view this as a form of corruption and economic manipulation, as per the following verse:
“O believers! Do not devour one another’s wealth illegally, but rather trade by mutual consent.” (Quran 4:29)
In modern times, one of the ways money is debased is through quantitative easing, (simply put: a process in which a government digitally prints money) which contributes to inflation. It follows the logic that:
If there are more dollars overall, then the value of of those dollars decreases.
Is Money Good or Evil?
Conversations on money often divide opinion and can be a sensitive subject. For many, the pursuit of money is viewed as ‘selfish’ and ‘greedy’.
But to really understand the question, we need to state the Islamic position on wealth. To do this, let’s first compare the two predominant viewpoints on wealth in modern society:
- Capitalism: Stresses the freedom of ownership
- Socialism/Communism: Underlines the need for collective ownership
Islam does not sit at any end of this scale. Instead, we believe wealth ultimately belongs to Allah SWT.
“And give them some of Allah’s wealth which He has granted you.” (Quran 24:33)
Muslims are granted wealth both as a blessing and a trial. On the day of judgment, regardless of whether we were rich or poor, Allah SWT will question us on how we earned and spent our money.
The Trial of Wealth
The trials that come with not having much wealth are obvious, but what about the trials that come to those who have wealth?
Although being wealthy can undoubtedly be seen as a major blessing from Allah, it comes fraught with its own challenges. For example, remaining humble is a major test for the wealthy.
The Quran has a famous story which represents the trial of wealth. The story tells us of a man blessed with immense wealth. However, it made him arrogant and ultimately brought the wrath of Allah SWT down upon him.
Give them O Prophet an example of two men. To the disbelieving one We gave two gardens of grapevines, which We surrounded with palm trees and placed ˹various˺ crops in between. Each garden yielded ˹all˺ its produce, never falling short. And We caused a river to flow between them. And he had other resources ˹as well˺. So he boasted to a ˹poor˺ companion of his, while conversing with him, “I am greater than you in wealth and superior in manpower.” (Quran 18:32-34)
And so all his produce was totally ruined, so he started to wring his hands for all he had spent on it, while it had collapsed on its trellises. He cried, “Alas! I wish I had never associated anyone with my Lord in worship!” (Quran 18:42)
This story comes in Surah Al-Kahf, which the Prophet ﷺ advised Muslims to read on Fridays, demonstrating the importance of remembering this warning.
The Prophet Muhammad ﷺ also used to make the following supplication:
"O Allah! I seek refuge in You from the trials of the Fire, and the punishment of the Fire, and from the evils of richness and poverty." (Sunan Abi Dawud 1543)
This dua has a deeper and poignant message. It shows that there is evil in both wealth and poverty and that wealth in of itself isn’t good nor bad. Instead, it’s what we do with wealth that will be judged.
So there we have it. Money is a central aspect of our daily lives. It is a medium of exchange, facilitating trade and commerce, and as a unit of account, allowing us to assign prices and value to things. It is also crucial to enable people to store value over time.
The significance of money requires us to reflect deeply on our relationship with it. As Muslims, we look to Islam as the ultimate source of guidance. Islam provides us with principles to ensure our money circulates freely, leading to a healthy economy.
We should not shy away from wealth. Recognising that money ultimately belongs to Allah SWT and is granted to us as both a blessing and a trial, frees us from the blind pursuit of money. Instead, it encourages us to do our best with what we have. So ensure that your income is earned through lawful means and strive to use it to please Allah SWT.
As a final point, dua is the best weapon of the believer. We should all follow in the Prophet’s ﷺ example and make dua for protection from the evils of both wealth and poverty. We should also make dua for a good provision as per the following:
“O Allah, I ask You for knowledge that is of benefit, a good provision, and deeds that will be accepted.” (Sunan Ibn Majah 925)
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