Islamic Finance

Old Age

Misconceptions about Retirement Planning

My expenses will drop when I retire.

My retirement will only last 15 years.

I can depend on Social Security and my company pension to pay for my basic living expenses.

My pension benefits will increase to keep pace with inflation.

My employers health insurance plan and Medicare will cover my medical expenses.

There’s plenty of time for me to start saving for retirement.

Saving just a little bit won’t help

Lets think for a while..

If from age 25 to 65 you invest $300 a month (9% interest-annual) at age 65 you’ll have 1.4 million in your retirement fund.

Wait ten years until age 35 to start and you’ll have about $550,000 at age 65.

Wait twenty years until age 45 and you’ll have only $201,000 at age 65.

Children and Money

Parents can help children become effective money managers and responsible buyers by teaching them money management skills from an early age. Financial education should be based on the needs, interests, and abilities of each child. The following guidelines may be helpful for parents:

Under 5. Around age 3.
You can start talking to your children about money. Use a piggy bank to teach how to identify and count coins and cash. Between 4 and 5, you can explain the importance of good savings habits. Help them learn that saving for a specific item and then buying it gives great satisfaction. Take your child to the store to actually see a toy he or she saw advertised. Together, examine the toy and decide if it can really live up to the promises made in the commercial. Children at this age are quite aware of commercials and sing the jingles they hear on the television and radio. Begin talking with them about the financial realities of the family and how choices are made.

Ages 5 to 10.
When children start school is a good time to give an allowance and open a savings account. You can teach them to plan the use of their money, whether from allowances or money gifts. You can also suggest that they can earn extra money by doing additional household jobs. When children begin spending money you can help them analyze their decision making. They will learn that there are consequences when we make poor decisions and that it is important to prioritize needs and wants.

Ages 11-14.
When children enter adolescence they are concerned about what their friends are doing and buying. Consequently, they tend to adopt the spending patterns of their peers. It is a good time to demonstrate the importance of comparison shopping when you buy goods and services. During this time many teens find jobs such as baby-sitting, lawn mowing or snow shoveling. They can save the money they earn or spend it for extras such as clothing, accessories, and CDs. It is important that they have control of their money because their financial successes and failures will become valuable learning experiences.

Ages 15-18.
These are difficult years when teens are trying to become independent but are still financially dependent on their parents. This is the time to seriously discuss savings for long-term goals such as college or a car. To obtain these goals many teens have part-time jobs such as fast-food restaurant workers, salesclerks, or cashiers. During their senior year in high school, some students obtain a checking account and/or a credit card to be used in college.


Spending Plan

A spending plan can encourage children to be careful money managers. The following topics can be discussed:

# identify income, including allowances and gifts
# set goals based on needs and wants
# determine expenses, both fixed and flexible
# develop a spending plan
# revise the spending plan as needed

Financial Literacy in Campus

How to Reduce Credit Card Debts

The Richest Man in Babylon

George S. Clason first published The Richest Man in Babylon in 1926. Told as a collection of narratives set in ancient Babylon (supposedly the wealthiest city in the history of the world), the book stresses simplicity and common sense in the management of one's finances. The tales in Clason's book swirl around a group of simple characters differentiated by class — that is, those characters who are in difficult financial straits (and are looking to find a way out) take it upon themselves to meet with a few of their notably affluent fellow citizens. They then inquire as to the basis of the affluents' riches. There are few complicated remedies espoused by the Babylonian "financial gurus." Rather, these are the absolute basics of successful personal finance. Readers will see these same tenets rehashed and rephrased in just about every other personal-finance book out there.

FIRST CURE: Start thy purse to fattening.
The stream of money that flows into and out of one's life is immense. Wealth and security can be secured from it, but only if portions of that stream are diverted. Time and again, the book's "enlightened" characters stress saving at least ten percent of your income every month, without fail. Accomplish this by setting aside that ten percent before all other expenses are considered.
"But when I began to take out from my purse but nine parts of the ten I put in," Arkad said, "it began to fatten. So will thine."

SECOND CURE: Control the expenditures.
The amount of money a person makes is important, but it is secondary to the degree to which that person controls his expenses. Budget and plan your expenses earnestly. Demand value for the dollars you spend. "That what each of us calls our 'necessary expenses' will always grow to equal our incomes unless we protest to the contrary," Arkad stated. "Confuse not the necessary expenses with the desires."

THIRD CURE: Make the gold multiply.
Three words: interest, interest, interest. Take care to see that all saved monies are kept in the highest-yield interest-bearing accounts available. If you have the experience and education to do so, invest a portion of your money by other means, always striving to create a reasonable risk/reward ratio. "A man's wealth is not in the coins he carries in his purse; it is the income he buildeth. That is what thou desireth: an income that continueth to come whether thou work or travel."

FOURTH CURE: Guard the treasures from loss.
Forget about gunning for those astronomical returns promised by market gurus and their "hot tips." And don't bother with those wacky startup businesses you see boxed in the classified ads, either. If you're going to take risks and invest your money, then make sure you have the education to know how to guard and protect your assets. Only you can keep your best interests at the forefront. Your savings control your future; treat them like it. "The first sound principle of investment is security for thy principal. The penalty of risk is probable loss. Study carefully, before parting with thy treasure, each assurance that it may be safely reclaimed. Be not misled by thine own desires to make wealth rapidly."

FIFTH CURE: Make of the dwelling a profitable investment.
In most cases, home ownership — even when financing is included — is preferable to renting. At some point, the mortgage payments will end, and ownership will be achieved. There is no ownership for the renter ... ever. "Thus come many blessings to the man who owneth his own house. And greatly will it reduce his cost of living, making available more of his earnings for pleasures and the gratification of his desires."

SIXTH CURE: Insure a future income.
The future cannot be known, but preparations can be taken to assure a certain level of financial safety. Whether this is done via a strict savings plan, outside insurance, or a combination of both, one must be careful to provide for the wellness of himself and his loved ones in later years. Disability and untimely death have caught and ruined families and their finances since time immemorial. "No man can afford not to insure a treasure for his old age and the protection of his family, no matter how prosperous his business and investments may be."

SEVENTH CURE: Increase the ability to earn.
Last among Clason's "cures" is action taken to increase one's earnings. Acquire education, experience, and confidence in yourself, and use these things to improve your income. You might begin a second, part-time job, or simply freelance your abilities in your spare time. Whatever you do, never underestimate the opportunity to turn a favorite hobby or skill (woodworking, photography, home decorating, cooking, etc.) into extra income. "The more of wisdom we know, the more we may earn. The man who seeks to learn more of his craft shall be richly rewarded. Cultivate the own powers, study and become wiser, become more skillful, and act as to respect theself."

http://www.mdmproofing.com/iym/sevencures.html

Slashing your Grocery Bill…

By Adrie Roberts, Utah State University Extension :

• Bulk buying. Purchasing sale items or good deals in stores you seldom shop, in quantities to get you through to the next sale.
• A price book or system to keep track of prices between various stores.
• Elimination of non-nutritious foods such as soda pop, ice cream, and candy.
• Elimination of convenience foods (especially foods packaged in single-serving containers).
• Choosing less expensive food. This includes tuna, powdered milk, cheaper vegetables and fruits.
• Buying store generic brands.
• Vegetarianism. Cut back on meat and substitute dried beans and whole grains.
• Portion comparison. Instead of comparing boxes of raisin bran, compare raisin bran to oatmeal or pancakes or instead of buying steak when on sale compare portion price to that of chicken.
• Free food. Garden surplus from neighbors, wild berries, food obtained through barter.
• Preparing foods from scratch.
• Maintaining optimum weight. Since your metabolism increases the more you eat, reducing your weight can make a significant difference on your food bill.
• Waste nothing. This includes making sure that children finish meals, cooking a turkey carcass for soup stock, and eating leftovers.
• Eat fewer meat and potato meals. Casseroles, soups, stews, stir-fry meals, etc, are generally less expensive – and better for your health.
• Experiment making your own mixes. Instant non-fat dry milk in mixes makes the mixes very economical to use. Take one day or evening and make several mixes at once.
• Use your food storage. Change your thinking to using your “food supply” rather than your “food storage”.
• Shop alone after you have eaten. Statistics indicate that people buy more when they are hungry or accompanied by others, especially children. Stay on the outer edges of the store. Inner isles have pre packaged high fat foods that your body and checkbook can do without.
• Plan meals in advance according to grocery store ads.
• Use unit price data. Compare the cost of similar products of various sizes by weight, volume, or count. Check to see if larger quantities are more economical than small ones.
• Be a brand switcher. Different brands of the same product can be roughly equal in quality and nutritional value yet varies widely in price. Experiment with the products carrying store labels.
• Learn nutritional alternative. Study up on the nutrients essential for health and what foods provide them. Protein, for example, comes in many forms. A meal containing beans, rice, whet, corn, or milk can be as rich in protein as one featuring sirloin steak. Read labels, compare values.
• Try new meats. Grains for cattle feeding are expensive in relation to the amount of meat produced. Meat from grass-fed cattle and calves is less expensive and is more healthful since it has less fat. Since it is leaner, it shouldn’t be cooking too long or at too high a temperature.
• Try cheaper cuts. Learn how to cook these cuts. Though the taste is different, you might be pleasantly surprised. Try marinating a cheap cut instead of using the more expensive piece packages expressly for a certain dish.
• Buy the serving. Don’t ignore the more expensive boneless cuts of meat. Though bony meats are cheaper per pound, they yield less edible meat per pound.
• Get out of the rut. Get out the cookbooks and try something new. Consider making form scratch many of the things you habitually buy in prepared form.
• Attend cooking classes that are held locally for new ideas. Insist on freshness. The date marked on all perishable foods is the “pull date”, the last day on which the product can remain on the shelf in the store. It is not a spoil date. You may be able to get a discount on these items.
• Buy quantities you can use. Large quantities are often bargains, but only if they will keep safely until you can use them up. Store them properly.
• Buy fresh fruits and vegetables at their peak season, when prices are usually lowest.
• Consider group strategies. A neighborhood group might save by buying in build directly from wholesalers and farmers. Or a shopping club could check the ads for specials, then send members on shopping trips to different stores to buy for the whole group. Some stores will honor other stores’ sales or promotional items.
• Save on cereals and baked goods. There are two benefits in buying unsweetened cereals. They cost less than sweetened cereals, and you can control the amount of sugar you or your children consume.
• Save on milk and eggs. Nonfat dry mild commonly costs about half as much as the wet variety, and you can use it for cooking or for drinking. The distinct taste of nonfat dry milk when used in cooking is hard to detect. Determine which of any two sizes of breakfast eggs is the better buy.
• Drink more water!
  
  Make your family more financially fit, and physically fit!