In the name of God, the compassionate the merciful
Financial literacy is very imperative, the more financially literate a population is, the more enlightened they will become about money and expenditure. Financial literacy refers to the knowledge and understanding of various financial topics such as budgeting, investing, saving, and managing debt. It includes the ability to make informed and effective decisions about financial matters and to understand the implications of those decisions. Financial literacy is important for individuals to be able to effectively manage their finances and make sound financial choices.
Financial literacy is extremely important for individuals and society as a whole. It enables people to effectively manage their finances, make informed decisions about saving and investing, understand the impact of financial decisions on their overall well-being, and protect themselves from scams and fraud. Additionally, having a financially literate population can contribute to overall financial stability and economic growth. Therefore, financial literacy is imperative for individuals to achieve financial security and for society to thrive. However, today, we are going to deal with Islamic financial literacy.
Islamic financial literacy refers to the understanding and knowledge of financial concepts and practices within the framework of Islamic principles. It includes an understanding of Islamic financial products and services such as Sharia-compliant investments, Islamic banking, and Takaful (Islamic insurance), as well as the ethical and legal rulings associated with Islamic finance.
Individuals with Islamic financial literacy can make informed decisions about financial matters that align with Islamic principles and are aware of the Islamic financial instruments available for investing, saving, and managing finances in a Sharia-compliant manner. Islamic financial literacy also encompasses an understanding of the prohibition of riba (usury/interest), the principles of risk-sharing, and the ethical guidelines that govern financial transactions in Islamic finance.
Islamic financial literacy is an ideal opportunity for both Muslims and non-Muslims as follows:
Islamic financial literacy enables Muslims to understand and comply with Sharia-compliant financial practices, ensuring that their financial decisions and investments are in line with their religious beliefs. With Islamic financial literacy, Muslims can make informed and ethical financial decisions, avoiding interest-based transactions and engaging in risk-sharing and ethical investment practices.
Knowledge of Islamic finance allows Muslims to access a wide range of Sharia-compliant financial products, including Islamic banking, Takaful, and Islamic investment funds, that cater to their religious beliefs and financial needs. It also directs non-Muslims to know how to tap into the growing market for Sharia-compliant financial products and services, broadening their knowledge and options in the global financial industry. Shariah-compliant finance has become a global commodity.
Last but not least, knowledge of Islamic finance promotes diversity and inclusion in the financial sector, fostering a greater understanding of different financial practices and principles. Non-Muslims can benefit from understanding Islamic financial principles as it encourages responsible and ethical financial behaviour, contributing to a more ethical and sustainable financial system.
In a nutshell, Islamic monetary skill is important for both Muslims and non-Muslims as it promotes ethical and responsible finance, provides access to a growing market, and fosters diversity and inclusion in the global financial sector. And Allah knows best! Praise be to God in whose favor good deeds are accomplished” (ibn Majah 3803)
YAHAYA ILIASU MUSTAPHA
The writer is an Islamic Banking and Finance patron and advocate in Ghana and beyond.
Email: yahaya0246873726@gmail.com
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