How money moves through your home

This lesson is one exercise on one sheet of paper, and it takes about an hour. At the end you'll have a map of your money that every lesson after this one builds on.

What you'll have at the end

One page with three boxes: what comes in, what goes out, what sits. And one number that answers "how much of my money is working and how much is parked".

Step one: write down everything that comes in

Take a sheet and divide it into three columns. In the first, write every amount that enters your household in an ordinary month, as the real figure, not a guess: salary after deductions, freelance work, rent from a flat you own, money a relative sends, profit from something you sell. Don't write "about 12,000". Open the deposit notification and write 11,650.

Most households here live on one source. That isn't today's problem, but next to each source write "active" if it stops when you stop working, and "asset" if it arrives without you working for it every day. Lesson 1.4 comes back to that difference.

Step two: write everything that goes out, in two groups

The second column is for spending, but not as one list. Above a line, write what leaves whether you want it to or not: rent, DEWA or the electricity bill, internet, the phone instalment, school fees, the monthly transfer home. Below the line, what leaves by your own decision day by day: groceries, restaurants, petrol, clothes, top-ups.

The figure above the line you can get from last month's bills in five minutes. The figure below the line nobody knows from memory, and that gap is what swallows salaries. If you log your spending in an app, open last month and copy the total. If you don't, write your best guess and put a large question mark beside it; lesson 2.1 exists to remove that question mark.

Step three: write what sits

The third column is for money that isn't moving: cash in a drawer, a balance in an account you never touch, gold in the safe, stock in a storeroom that hasn't sold in months, an amount you lent a cousin and haven't seen back. Write each one at today's value.

This is the column that surprises people. A man complains the month is tight while 40,000 AED has been asleep in a drawer for two years, not working and not protecting him from anything, losing a little of its value every month while he thinks it's safe.

Step four: ask one question of every item

Go down the second and third columns item by item and ask: does this bring me anything, or does it only consume? The family car consumes. A rented-out flat brings. The laptop you work on is a tool of production. The fridge in the shop you own is a tool too, which is why there's no zakat on it, while there is on cash and on the goods you've put out for sale. Islamic law itself separates what's held for use and production from what's held to be sold, and in practice that's the line between money that works and money that stands still.

Put a star next to every item that "brings". If there isn't a single star on the page, that's the most important thing you'll learn today.

Step five: work out your number

Add up the third column, then divide by a month's income. If you get 4, you have four months of income parked and doing nothing. That may be deliberate; you'll want some of it as an emergency fund in module 4. But everything beyond that is idle money.

Zakat is part of how the money on this map moves. A fortieth each year on cash, trading stock and the debts you expect back, after subtracting what you owe. A household that pays its zakat knows how much idle money it has, because it had to count it.

Where most people trip

Step two. They write "expenses 9,000" as one number and move on, and the map collapses later because half that number was a guess. Accept that the page is incomplete tonight; don't accept a page with no line between what you choose and what you don't.

Tonight's exercise

The sheet with its three columns, the line with above and below, the stars, and the final number. Photograph it. You'll come back to it in lesson 1.4 to count the stars, and in lesson 4.1 to decide how much of the third column stays as your emergency fund.