Principles for Simple Living and Wise Debt Management

We should always pay attention to the advice from the Quran and Hadith to live a good and proper life in this world. Allah SWT says in Surah Al-Baqarah, verse 188: “And do not consume one another’s wealth unjustly or send it [in bribery] to the rulers in order that [they might aid] you [to] consume a portion of the wealth of the people in sin, while you know [it is unlawful].”

In a Hadith narrated by Abu Hurairah, the Prophet Muhammad SAW said: “You will not believe until your desires follow what I have brought.” (HR. Ahmad and Tirmidhi).

From these verses and Hadith, we understand that living simply and avoiding debt is highly recommended in Islam. We should keep track of our expenses and avoid unnecessary spending. We need to learn to save and manage our money wisely.

One example of a companion who lived simply and avoided debt is Umar bin Khattab. He always lived simply and never spent more money than necessary. In fact, Umar bin Khattab once said that he did not want to be wrapped in a shroud costing more than 4 dirhams when he passed away.

In our daily lives, we can also follow the example of companions in saving and not squandering wealth. We should monitor our spending and save for the future. By saving, we can avoid debt and have a reserve of money for emergencies.

Additionally, we must learn to manage money wisely and avoid spending on non-essential items. We should balance our needs and wants, prioritizing urgent needs and avoiding unnecessary expenses.

Maintaining a Lifestyle and Social Circle

Keeping your social circle in line with your income is crucial to avoid falling into excessive lifestyles and uncontrollable debt. Here are a few tips to avoid living beyond your means:

1. Set Spending Limits First, it’s important to set spending limits based on your income. Create a detailed monthly budget and prioritize essential expenses like food, clothing, and housing.
2. Find a Healthy Social Environment Try to find social circles that match your income. Many social organizations and community activities can be a place to meet like-minded people. Such environments can provide support and positive motivation to stay simple and avoid excessive spending.
3. Resist Consumer Temptations Often, we’re tempted by promotions or discounts that make us buy things we don’t really need. To avoid these temptations, it’s important to maintain self-discipline and focus on essential needs.
4. Learn to Save Saving is a crucial habit for a simple life and avoiding debt. By saving regularly, we can build an emergency fund for unexpected situations.

The Quran also provides a lot of advice on living simply and avoiding debt. One relevant verse is Surah Al-Baqarah, verse 188:
“And do not consume one another’s wealth unjustly or send it [in bribery] to the rulers in order that [they might aid] you [to] consume a portion of the wealth of the people in sin, while you know [it is unlawful].” (QS Al-Baqarah 2:188)

This verse emphasizes the importance of not stealing or acquiring wealth unlawfully. Additionally, Hadith from the Prophet Muhammad SAW teaches the importance of living simply and avoiding debt. For example, there’s a Hadith that says:

“Whoever lives simply will live peacefully. And whoever keeps himself from debt will live freely.” (HR Ahmad)

An example of a companion who lived simply and avoided debt is Abu Bakr Ash-Shiddiq. He lived simply and avoided debt, even after becoming caliph following the death of the Prophet Muhammad SAW.

Creating a Budget for Necessities

One way to control our spending is by creating a budget.
When creating a budget, we need to consider both our income and expenses. Start by tracking every expense for a month. Then, categorize these expenses into essential and non-essential.

After categorizing, create a budget plan for the following month. Focus first on essential expenses such as food, clothing, and housing. Then, allocate the remaining income for non-essential expenses like entertainment or shopping for unnecessary items.

Additionally, we need to learn to save. Saving is a way to avoid debt and prepare for future needs. Determine an amount to save each month, such as 10% of your income.

Saving isn’t easy. It requires discipline and consistency. One way to make saving easier is by automating transfers between accounts, like moving a portion of your income to a savings account each month.

When facing temptations to spend saved money, having strong motivation helps. A powerful motivation for saving is preparing for future needs, such as buying a house or funding your children’s education.

Lastly, to avoid living beyond your means, choose a social circle that doesn’t lead to excessive spending. Associate with people who share your values, such as those who live simply and value money.

In the Quran, Allah SWT also teaches us to live simply and avoid excessive luxury. Allah’s words in Surah Al-Baqarah, verse 267, are: “O you who have believed, spend from the good things which you have earned and from that which We have produced for you from the earth, and do not aim for the defective from it to spend [for] yourselves while you would not take it except in disregarding [it].” (Surah Al-Baqarah 2:267)

Always Remember Debts and Plan to Pay Them

Debt can be a heavy burden, especially if not paid promptly. When someone continuously postpones paying their debt, it grows and creates many problems. Therefore, it’s very important to pay off debt as soon as possible.
There’s a Hadith that teaches the importance of paying off debt promptly. The Prophet Muhammad SAW said:

“Indeed, a man who has debt, he does not pray unless he mentions his debt, and he does not fast unless he settles his debt.” (HR. Bukhari and Muslim)

This Hadith shows that paying off debt is a duty for every Muslim. Thus, when someone has debt, they must pay it off promptly to avoid disrupting their worship.

Besides religious reasons, paying off debt also has other benefits, such as improving financial well-being. By settling debts, one can gain financial freedom, making it easier to meet daily needs.

Saving

Saving is crucial for preparing future needs, such as education, weddings, retirement, or even buying property. In Islam, saving is also recommended as a way to prepare for unforeseen events.
On the other hand, squandering wealth can lead to negative impacts, such as mounting debt, difficulty meeting basic needs, or even harming one’s morals and character. Therefore, it’s very important to be wise in using one’s wealth.

A companion known for living simply, avoiding debt, and saving is Uthman bin Affan. He was wealthy and known for his generosity, yet he lived frugally and did not waste his wealth. Uthman bin Affan always saved for the benefit of the Muslim community, such as funding battles and helping the poor. He also never took on debt, as he believed it should be avoided.

The Quran also contains many verses advising saving and avoiding squandering wealth. One such verse is Surah Al-Isra, verses 26-27:

“And give the relative his right, and the poor and the traveler, and do not spend wastefully. Indeed, the wasteful are brothers of the devils, and the devil is ever ungrateful to his Lord.”

From this verse, it’s clear that Allah SWT wants His followers to use their wealth wisely and not be wasteful. As Muslims, it’s important to practice this teaching in daily life.

tag: living simply and avoiding debt according to the Quran and Hadith, saving and managing money wisely in Islam, examples of companions who lived simply and avoided debt, tips for avoiding excessive lifestyles and uncontrolled debt, the importance of setting spending limits and resisting consumer temptations in Islam.

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