Financial prudence involves managing our finances and resources in a careful, cautious, and sensible way by making informed decisions, planning for the future, and avoiding unnecessary risks. By doing so, we can lead our lives with stability, security, and confidence.
In 21st March 2024 Talika Mubarak, Mawlana Hazar Imam has mentioned: " “I remind my Jamat – as I have on a number of occasions – that at the time of geo-political and economic challenges, my Jamat should continue to exercise prudence in their lives, in particular in areas of economic activity.”
It's important to exercise prudence to protect, safeguard, and even improve our lives. Here are some simple steps that we can all take:
Step 1 - Monthly Budgets: Create a set budget, live within your means, and avoid overspending. Deviations can occur, but being aware of them can help us to control them to a minimum.
Step 2 - Savings: Create the habit of saving part of your monthly income, which is easiest by automating a debit to a savings account and auto-investing it. Set a target of saving at least six months' worth of income for contingencies.
Step 3 - Spend Wisely: Make informed buying decisions based on your budget and the value you will get over the product or service lifecycle.
Step 4 - Resist Temptation and Risk: Avoid unnecessary purchases and risky investments, particularly those that are complex or that do not make logical sense.
Step 5 - Plan Long-Term: Set goals and monitor progress to achieve financial independence. It's also important to revisit and reevaluate goals and your financial position periodically.
Step 6 - Avail Insurance: Create safety nets by securing health, child education insurance, and goods and property insurance so that your savings and personal finances are not affected by unforeseen circumstances.
Step 7 - Avoid Unhealthy Habits: Understand the long-term consequences of unhealthy habits, noting that they can evaporate your lifetime savings and even lead to unnecessary debt for your family.
Step 8 - Diversify Income: Create more sources of income by getting passive income, a second income, and having a second family earner where applicable or possible.
Step 9 - Retirement Planning: Plan towards your retirement exploring the available options and possible contributions so you can secure your future and your family stability.
Step 10 - Professional Planning: Where possible, seek professional investment planners to maximize returns, and diversify investments while minimizing investment risk.
If you wish to get started and plan, please register on The Ismaili app and approach your Economic Matters members in your region.
