Halal earning and working out your zakat
In the last lesson you mapped your money. Today we go back over the first two columns with a different question: where does this money come from, where does it go, and is the whole road clean? Then we work out zakat with actual numbers, because most people pay it "roughly" and have never counted what they own.
This is a practical lesson. No sermon, just a checklist to go through and a sum to finish in half an hour.
What you'll have at the end
Each income source checked on four points, this year's zakat as a figure, and one rule for your margin if you sell anything.
Step one: check the source, not the amount
Trade and earning a living are things the Quran encourages, even during Hajj season and straight after Friday prayers. The problem, when there is one, is in the road the money takes. Take the income sources from your sheet and ask four questions of each:
- Is the product or service itself permitted?
- Do I sell honestly, without inflating the description or swearing to it?
- Am I exploiting somebody's need, or holding back something people need?
- Does this work keep me from prayer or from my family?
If a source passes all four, it's clean. If it fails one, don't excuse it by spending the money on good things; earning wrongly to spend rightly doesn't clear anyone, and the rule is blunt: with money, the end does not justify the means.
Step two: if you sell, fix your margin
Plenty of people selling from home or a small shop don't know their margin, so one day they sell at double and the next at a loss. A sane margin is 15 to 20 percent over cost. Something that costs you 200 AED sells at 230 to 240. Much above that, especially when the item is scarce, is the price-gouging that carries a warning in the tradition, and it's also what stops a customer coming back.
Write your margin on the first page of your sales book, or in the item's description in the app, so you stop re-deciding it on every sale.
Step three: work out zakat with numbers
Pick a fixed day each year, the first of Ramadan say, and make it your counting day. On that day write down:
- All cash: wallet, account, drawer.
- Trading stock at today's selling price, not what you paid.
- Money people owe you that you expect back.
- Subtract debts you owe that are due.
- If the result reaches the threshold, zakat is a fortieth: 2.5 percent.
Example: cash 30,000 AED, stock 20,000, owed to you 5,000, you owe 10,000. Total 45,000, zakat 1,125 AED.
Notice what stayed out: the home you live in, the car, the fridge, the desk, the scales, the shop's tools. Everything held for use or production is exempt; everything held to be sold is counted. The rule itself nudges money toward productive assets, and that's the first investing lesson you'll get in this course.
Step four: fix a small charity before the spending
Zakat is a yearly duty; sadaqa is a monthly habit, and the most useful kind is small and fixed. Two percent of the salary, out on day one, before groceries and before instalments, to a relative in need, a neighbour, or a charity you trust. People who leave it to the end of the month find nothing left to give. Try it on day one for three months and you'll see why.
Step five: understand what contentment means
The biggest mistake here is thinking that detachment from money means being poor. Detachment means the money stays in your hand and out of your heart; you own it without it owning you. Some of the Prophet's companions died leaving large fortunes from trading in the market, and it took nothing from their standing. Poverty alone earns no credit, wealth alone earns no blame, and the reckoning is on the road the money came by.
What that means in practice: don't be shy about asking for a raise or pricing your service at what it's worth, and don't deny your household what's permitted in the name of piety. And on the other side, no prayer gets delayed and no family tie gets cut because work got busy. That's the line.
Where most people trip
The third zakat item: debts. Most people forget that money they lent a brother is still theirs and still owed zakat if they expect it back, and forget to subtract the instalment that's due on them. The first understates the zakat, the second overstates it.
Tonight's exercise
Put each income source on your sheet through the four questions. Then work out zakat with the five items as if today were the counting day, even if it isn't, so you know your figure. Write it on the same sheet.
Questions I get asked
My salary comes from a company whose business is mixed.
If your own work is permitted and your pay is for real work, the salary is yours. The company's activity is answered for by whoever decides it.
Is zakat due on the gold my wife wears?
Scholars differ. The safer view pays it once it reaches the threshold; the easier view exempts ordinary worn jewellery. Ask someone whose knowledge you trust in your country and stick to one opinion.
My stock hasn't moved for a year, what price do I count it at?
At what it would actually sell for today, even if that's below cost. Zakat is on the real value, not on what you paid.
Log every sale and every expense in Fawatery so that on counting day you have a statement ready instead of a memory to guess from
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Based on: "Islam and trade" by Sheikh Yusuf al-Qaradawi, and "The complicated relationship between Islam and wealth" from the Mal Show podcast.
The next lesson is about habits smaller than any of this: the little decisions that keep a man poor however much his income grows.