4 Fundamental Principles of Wealth Building
Wealth is one of the most misunderstood topics in the Muslim world. There are those who believe that wealth is evil and poverty is piety, and others who simply leave the entire matter to destiny. Both approaches do not reflect the middle ground approach Islam takes to the importance of halal sustenance. Previously, we discussed the hadith in which we learned that Allah loves the financially independent. In that discussion, we clarified that Zuhd is to remove the love of wealth from the heart, and can equally be attained by both the wealthy and the poor.
In this article, we will clarify the correct Islamic position regarding the relationship between Qadar (destiny) and Rizq (sustenance). Then we will discuss four essential principles for anyone who wants to try and upgrade their level of wealth in a halal/ethical manner.
Is Wealth Predestined?
A common misconception is that wealth is entirely predestined, and there is no point is striving for it. The problem here is multifaceted and we may discuss it in more detail in another article. Simply put, Islam teaches us to look at our past through the lens of destiny, not our futures. We do not know the future, therefore we do not assume that poverty is destined for us.
Our job is to strive moderately, and through that moderate striving, Allah facilitates that which is destined for us. Not knowing if our future is one of poverty, wealth, or middle class income, we should all work ethically to earn halal sustenance. Then when we look back at what we earned for a specific period, we should be content with our destiny for that period. In Islam, destiny is not an excuse for laziness, it is simply acknowledgment of what has passed.
The Prophet ﷺ said, “O people, fear Allah and be moderate in seeking a living, for no soul will die until it has received all its provision, even if it is slow in coming. So fear Allah and be moderate in seeking provision; take that which is permissible and leave that which is forbidden.” (Ibn Majah 2144, Grade: Sahih)
Understanding that Islam encourages us to strive moderately for our sustenance, it is important to understand how to do so. The methods that work to build wealth differ based on time, place, economy, and culture, but some principles are universal. Here are four universal principles for building halal wealth.
Seek to understand money
One of the failures of the current education system is that it produces financially illiterate graduates. This is by design. The school system is designed to produce factory and office workers, not entrepreneurs and wealth builders. You are taught the knowledge and skills needed to survive and earn a paycheck, but purposely kept in the dark on how to build wealth or upgrade your life. Thankfully, we live in a time when this knowledge is easily accessible.
There are many books, websites, online courses, and podcasts today that bridge this gap. Anyone who wants to understand money can do so with a little effort. Seek out resources on financial literacy. Learn how money works, how to invest, save, and grow your wealth. The more you understand wealth and how it works, the easier it becomes to build your own and escape the rat race.
Set financial goals and strive for them
Without clear measurable goals, it is very easy to fall into the trap of just spinning our wheels. Even a promotion or salary increase do little to improve one’s life if we are financial illiterate or lack clear goals to strive for. lifestyle creep, debt, and lack of clarity all get in the way of reaching higher levels of wealth. One of the best moves you can make today is to set clear goals for wealth building. These do not need to be high unrealistic goals, but workable milestones that you can move toward with each passing day.
A goal should be specific, measurable and realistic at the minimum. Utilize the SMART system to refine your goal setting process. Start with something small like saving 5% of your monthly income or paying off some debt, and scale over time. Have monthly, annual, and multiyear goals. Review these goals regularly to track your progress, figure out what is working and what is not, and to improve your strategies. Think of money in terms of numbers, you just need to keep stacking high numbers every time you meet a goal.
Take calculated and strategic risks
There is no success in business without risk. Risk is the single biggest differentiator between the successful and the failures. Risk is scary and difficult. Most people are naturally risk averse. This is why we choose the safer route even when we know it will produce lesser results. Our comfort zones tend to be risk-free, as risk comes with fear, anxiety and potential failure. But risk also comes with potential success, massive rewards, and great lessons.
The reality is that anything worth doing is risky. If you find a potential goal scary and difficult, then it is highly likely that this is that very goal that could change your life. Success lies in facing our fears and taking massive risks. This is simply the way of the world.
But our risks must be calculated and strategic. Do not take risks just for the sake of it, or our of greed. Take your time, research, think through all potential results and outcomes, develop plans and strategies for things that could go wrong, and then, when you are ready, take a huge calculated strategic risk.
Diversify
It is very rare, but doable, to reach high levels of wealth with a single source of income. This is especially true if your income is a salary. A salary these days is rarely enough to cover basic expenses, not leaving anything behind for savings or investments. To attain wealth, we must find ways to develop multiple streams of income. Even a small side business that brings in a few extra hundred dollars a month can go a long way to improving the quality of your life.
Over time, as you grow in wealth, you will need to find new ways to diversify. A key strategy of wealth production is investing. Diversified investments increase chances of success while minimizing risks. It is foolish to put all one’s eggs on one basket. Just as one should not just a single source of income, you should not put all your wealth into one investment. Investments are risky, some fail and some succeed. You have to diversify if you want to achieve any level of success.
Conclusion
These principles will help you reach higher levels of wealth. By understanding the proper relationship between wealth and destiny, seeking financial knowledge, setting clear measurable goals, taking strategic risks, and diversifying, you can dramatically improve the quality of your life. The end result is a matter of destiny but none of us know what awaits us in the future, so we should pursue the best of paths with optimism and hope of success. In doing so, we may find a beautiful destiny awaits us on the other side of our hard work.
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