When receiving your first major source of income, there is often the opportunity to spend it wisely or not. As great as your income may seem at first, it can quite often disappear faster than it was received. So how do you save at least a portion of your income?
There are many things you can do to start saving. The choice overall depends on you and your individual circumstances, but here are a few ideas:
Make a Second Account: The first step might be to start a second bank account. A savings account will allow you to save money while using a daily checking account for day to day expenditure. Having a minimal balance in an account which is connected to your debit card will allow you to make sure you don't spend beyond your budget. This is key to saving for your future.
Retirement/Rainy Day Savings: As early as it may seem, retirement is really never too far away! As controversial and debatable RSPs and 401Ks are, they do provide that reserve for future sustainability. Having the ability to make your retirement fund aggressive, you have the option (being young) to invest heavily in stocks with the potential to do extremely well, or lose your money – but with the chance to recover it over the period of time.
Unnecessary Expenses: If you are eager to save and keep yourself from unnecessary expenses, the first step is figuring out where you waste the most money. A few common examples are too many on-the-go lunches, extravagant gym memberships, and anything else that is not a "necessity" in our lives. Although this may seem like a huge change in our lifestyles, it might be necessary to start eating out once a week instead of making it a daily practice. Something as small as lunch can potentially save up quite fast. Other suggestions include shopping at the dollar store for day to day items and gathering coupons while gaining as much of a bargain as possible.
Is this all really possible? As good as it sounds and as easy as it may look, to make it happen is quite difficult. The determination and willpower to say "No!" can take a huge amount of effort. Thinking long-term and having the ability to resist the extra expenditures can go a really long way!
Alongside all the savings and desire to keep our money for long-term use, we obviously cannot forget our obligation of Khums. The 20 percent tax on our "net income" is not only our religious obligation but it is the right of Lady Fatima and her Children (peace be upon them all). Surely we are conscious to not take the rights of other people on this earth, so how dare we even consider taking the right of Lady of the Universe?! (For a detailed discussion on Khums, please see Khums: An Islamic Tax by Sayyid Muhammad Rizvi, available online.)
Khums is obviously the bare minimum obligation though. Having been on the receiving end from our communities all our lives, the beginning of our career is the time to consider giving back, be it in the form of orphan sponsorships – supporting the life and education of someone who otherwise would not have the opportunity, or in the form of a donation to a local mosque – where we can directly give back to our very own community in helping it grow through the contribution in the building of an Islamic center. The ways and paths to contribute never run dry, but it is our responsibility to take our income and use it in a way that pleases our Lord and Creator.
While we continue to save our money, we must be cautious not to dip in either extreme. The extreme of extravagance is not allowed in Islam, nor is the extreme of being niggardly. In the pursuit of being a "saver", we must not enter the world of being a miser, as alongside our savings, the need to be generous and provide for those who are unfortunate and for worthy causes cannot be underestimated. Surely, Allah will reward us ten-fold for our generosity, and without a doubt there is no savings plan or retirement fund that can even come close to that!