Using a Budget to Control Spending
By Saghir Aslam
Irvine , CA


The following information is provided solely to educate the Muslim community about investing and financial planning. It is hoped that the ummah will benefit from this effort through greater financial empowerment, enabling the community to live in security and dignity and fulfill their religious and moral obligations towards charitable activities


It is difficult to manage your money if you don’t know how much you have or where it is going. Consider these steps when developing your budget:


IDENTIFY HOW YOU AR SPENDING YOUR INCOME. You should review an annual period so you identify regular monthly expenses as well as irregular, periodic expenses, such as insurance premiums, tuition, and gifts. Much of the information can be found by examining canceled checks, credit card receipts, and tax returns. Total expenses in categories that make sense for your lifestyle.

EVALUATE YOUR EXPENDITURES. If you’re having trouble finding money to save, critically review your expenditures:

Find ways to save at least 10% of your income. With essential expenses with fixed amounts, such as your mortgage, taxes and insurance, you may be able to refinance your mortgage, find strategies to help reduce taxes, or comparison shop your insurance to reduce premiums. Essential expenses that vary in amount, such as food, medical care, and utilities, can usually be reduced by altering your spending or living habits. Discretionary expenses, such as entertainment, dining out, clothing, travel, and charitable contributions, typically offer the most potential for reductions.

Limit the use of your credit cards. Not only do credit card balances carry high interest charges, but credit cards tend to encourage impulse spending.

Resolve not to purchase impulse items or items over a certain dollar amount on your first shopping trip. Go home, think about it for a week, and then go back to purchase. Often, you’ll decide you don’t need the item.

Delay the purchase of large items. For example, instead of purchasing a new car every two or three years, keep your car for four or five years.

PREPARE A BUDGET TO GUIDE FUTURE SPENDING. You may want to start by setting a budget for a couple of months, tracking your expenses closely over that time period. You can then fine-tune your budget for an annual period. Consider these tips:

Don’t include income in your budget that is uncertain, such as year-end bonuses, tax refunds or gains on investments. When you receive that money, just put it aside for saving.

Set up enough expenditure categories to give you a good feel for your spending patterns, but not so many that it becomes difficult and time-consuming to monitor.

Make your budget flexible enough to handle unforeseen expenditures.

Don’t be so rigid that your family is afraid to spend any money. Everyone in the family should have a reasonable allowance.

Find ways to make the savings component of your budget happen automatically. Get the money out of your back account and into an investment account before you have a chance to spend it.

Once you follow and master the above you will notice change in our finances. All of a sudden you will feel you have the control you are in the driver seat. You are the caption of the ship and you will inshaAllah see success!

Saghir A. Aslam only explains strategies and formulas that he has been using. He is merely providing information, and NO ADVICE is given. Mr. Aslam does not endorse or recommend any broker, brokerage firm, or any investment at all, or does he suggest that anyone will earn a profit when or if they purchase stocks, bonds or any other investments. All stocks or investment vehicles mentioned are for illustrative purposes only. Mr. Aslam is not an attorney, accountant, real estate broker, stockbroker, investment advisor, or certified financial planner. Mr. Aslam does not have anything for sale.




Editor: Akhtar M. Faruqui
2004 . All Rights Reserved.