The Price of Faith, Being Muslim

For those of you new to Free Money Finance, I post on The Bible and Money every Sunday. Here's why.

Here's a piece from CNN Money that discusses the price of faith, what Jews, Muslims, and Christians have to pay/spend related to their faiths. Here's how CNN Money describes the series:

To explore how religion affects the way people manage their money, we visited with three families of different faiths who are struggling to reconcile their spiritual beliefs with their wallets. Their stories, and our advice to them, follow. What all three households have in common: the desire to let faith guide their economic prospects, without undermining their family's security or long-term goals. As you'll see, that isn't always an easy task.

I'm highlighting this piece in three different posts and giving my comments along the way. Today we'll cover the costs associated with being Muslim. Here's a summary of what they have to spend because of their faith:

• $10,000 charitable giving
• $1,800 extra cost of shari'a-compliant mortgage
• $11,800 Total

If you're wondering what the shari'a-compliant mortgage is, it's a mortgage that isn't officially a loan since Muslims aren't allowed to pay or earn interest. Some details on this issue from the piece:

Take the Muslim admonition against paying or earning interest. Strictly interpreted, the rules make it tough to buy a house (traditional mortgages are off-limits), finance a major purchase (no credit cards), or put together a diversified portfolio (no bonds). Investing in stocks is limited as well - companies involved in forbidden activities (such as lending, gambling, and serving or making alcohol) are prohibited.

A few other highlights:

• Husband and wife are 28 years old.
• They make $117,500 a year.
• Their net worth is $17,500.

My take/comments:

1. This couple is the most generous of the three profiled -- in terms of both percentage given as well as total amount given. This said, they aren't giving up to the tithe level (not that Muslims are commanded to do this, I'm just comparing it versus my frame of reference.)

2. The article says (or at least hints at) that the reason they can't save more is because they give so much away. But these people make a good income. You're telling me they can't save a good portion of it? BTW, this is a problem with all these couples -- they're spending way too much of their incomes.

3. Net worth is low, though it's probably average for a couple their age (but I'm guessing it's low for someone making their income.)

4. They also have a prohibition from investing in companies with "unacceptable businesses."  Fortunately, there are mutual funds that screen companies for their adherence to Islamic principles.

Any thoughts on this from Muslim readers or those more familiar with the Muslim faith?

Comments

[mb]

hm... any religious type who puts ethics into investing will not go for the "fast buck", although sustainablility in ethical choices might be better in the long run. This is true for all religions. And i would like to see this couple's list of exppenses for the month.

[John]

Not Giving to Tithe level. Yes, that may be right from an Evangelical point of view. But the "zakat" is prescribed at 1/40th of any surplus wealth held for more than a lunar year. It is remarkably similar in concept to the long-term capital gains tax. Also, being an unaudited form of giving, much like "tithing", is essentially a test of conscience. For a couple to give away (on the face of it) $10k of "zaqat" on $17.5k of surplus; I would say they are doing far above and beyond what is "required" of them.

The $ 150 extra per month on their "mortgage" is essentially foreclosure insurance, for both the homeowner and the investor. Both have an additional interest in keeping the home and the owner together. Does that make it morally superior to "traditional" mortgaging? That truly depends on the needs of the parties involved.

Yes, their net worth is low, but they did just buy a home and still have student loans. As their home appreciates in value (perhaps not this year...) and the student loan is amortized, you will see that their 1/40th will converge towards the 1/10th tithing level of Evangelical standard. Additionally, the modern "tithe" mostly supports pastoral ministry, whereas most welfare is administered by the state (in the west). In most of the Middle East, the zaqat is the most local form of community welfare. One could make the observation that the state (for purely political reasons) has (until recently) an iron grip on the purse strings of their religious establishments, but that has only resulted in quite a number of those establishments providing/withdrawing popular support in exchange for a radicalization of their messages. (Different topic, sorry....)

Investing strategies. This is no different from environmentalists religiously investigating the bona fides of "green" companies, or protectionists. Well, the hard core ones. Most people of any stripe don't particularly care where they invest. If someone has a reason to invest a certain way, then they will act accordingly. Stocks are a little more baffling for Middle Easterners since historically, most corporate activities were conducted more like partnerships, truly buy and hold positions. The modern concepts of mutual funds, daily trading, derivatives are truly complicated and difficult to apply laws against that were developed in medieval tribal Arabia. But then again, that parallel holds for nearly all faith systems...

[Heahter]

Also? Another wealth-building obstacle for Muslims may be the prohibition on life insurance. From what I understand (my sister converted to Islam a little over a year ago) part of the charitable giving is meant to go to families who have lost their main breadwinner, as life insurance is haram*.

Another potential cost is the necessity of purchasing and eating only halal* meat: those which have been raised and slaughtered humanely and then had a blessing said at the time of slaughter. Potentially more expensive than regular meats, and requiring access to a halal butcher or meat supplier, and paying attention to labels on prepackaged foods (no gelatin or pork products). Much less restrictive than when staying kosher for those of Jewish faith (or even vegans, for that matter).

*Haram = forbidden. Halal = allowed

[Apu Nahasapeemapetilon]

Yet another wealth-building obstacle for Muslims is the fact that the vast majority of right-minded true Americans outright refuse to do business with them. These people know that, although most Muslims are not terrorists, the vast majority of terrorists are Muslims. These same people question whether it is right doing business with people who are of the same religion as the majority of the world's terrorists. Personally, I don't agree with this, of course.

Many people, if they encounter a turban-wearing individual running a business, selling a product or offering a service, simply turn around and walk away, fast. In states like New Jersey or Oregon, where all gas stations are, by law, full-service, this is particularly evident. If you pull up to the gas pump and an attendant walks towards you who chooses to parade their religion around by wearing a turban, you wait until they are about a foot from your car and you speed away. I don't do this, or condone this practice, but I know MANY people who do.

Believe me, being a Muslim is sometimes very difficult. It's not fair, but it's a fact.

[guinness416]

Given that the vast majority of muslims outside of downtown kabul don't wear turbans .... well, let's just say that hopefully the gas is more expensive at the next spot over. Mind you, my muslim and south asian husband has been mistaken for mexican, filipino, indonesian, peruvian, nepali, you name it by, uh, "right minded true americans" who needless to say often aren't the sharpest tools in the shed!

Heather's right about the halal food although as with the jewish example last week this may depend on where you live. Around here in Toronto and in our previous NYC neighbourhoods it is pretty common to find specialist south asian/arab groceries, pizzerias and the like using halal foods, and selected halal foods in the supermarket. My husband is a muslim (although like I'd guess most in north america, nowhere remotely as observant as the couple in the article) and although we don't usually buy halal meat, when we do it's not more expensive. The cost of buying whole cows for qurbani at Eid (religious festival) can be expensive though, as the suppliers ever so conveniently seem to ramp up the price at that time of year.

[CashAholic]

I agree with your comment regarding the net worth of the 28 year old couple. They earn a decent income, and if they practice some frugality their combined net worth should be more than 20K.

[A_Muslim]

I would like to point out that eating halal is not that expensive. In fact, a pound of halal beef costs far less than it does at your local Mega-Lo-Mart. This is because the halal butchers are mom 'n' pops type joint. You won't find fancy cuts of meat but you'll find a good deal. I recommand non-Muslim start going to these smaller shops to get their meat. The quality is not bad. You can get the same meat but at much lesser price.

Also Kosher is far more stricter and costlier than halal. I think.

I'm a 26 years old single Muslim and I'm just getting into the whole "real life" situations. I try to save more than I spend. I try to give as much as I can. Not to brag or anything I find so much comfort and enjoyment in giving than in saving or taking. But I realise I have to save. I could have made a killer profit a few months ago by buying WFC stock. Back when it was 8.73USD. Now it's post-24's. The only reason I didn't buy because it's forbidden for me to buy stocks of banks. Being a Muslim is challenging as far as finance goes. But it's not difficult. The one advice that matters most without any regard to religion is spend less than you earn. And try to expand what you save by investing.

I have a saving account and I earn a bit of interest on it. But I don't keep it. I give it away every year to charity or needy family. So I can't really expand the money. The only option I have is to start a business and I'm trying to find what I'm good at.

[Mary]

I see a lot of turban-wearing muslims in my travels throughout the US, mainly when visiting big cities. While I certainly have respect for their culture and always treat them nicely, as they do to me, I have my doubts. Next time you see one, ask yourself this: How many relatives must you go through in their family to find someone who wants to KILL YOU?

Face it, as was pointed out earlier, most terrorists are muslims, there is no way to deny the facts. Because of this, any muslim would, by association, have ties to a terrorist who wants to kill Americans. In most cases, this would be a blood relative. How can you have respect for that???

[A_Muslim]

I wish this thread didn't divulge into the politics. Since it's only about finance and Muslim. There are other blogs/forums you can go to air your geopolitical, anti-Muslim rants. Some people are intent on maligning Muslims in every situation and in every way possible. As much as I tried not to post *this* post, I cannot just be silent.

Everyone in this world is seperated by six-degree of relationship. So everyone is as much related to all the terrorists as are Muslims. How can you have respect for yourself? You're related to terrorists. And haven't you heard about not punishing the relative of criminals? There's no reason to punish Osama bin Laden's sons, for example, for what their father did. There's no reason to think of all Muslims as bad people and view us criminals when only maybe 1000 or less of so-called Muslims are terrorists.

When you respect Muslims and befriend one of us, don't force yourself. Respect us naturally. We are human and we are capable of everything you are capable of. And since this is a finance blog, let me leave with this: Muslims are the most educated and richest minority group in America. And this, after having overcome many issues such as not dealing with interest-bearing product.

Also more, there are terrorist in every culture, in every religion, in every walk of life. Terrorism is not a Muslim monopoly.

[Ray]

@ Mary Your comment IS NOT RELEVANT to this topic so I am not sure why you post it here. I wonder how far I would have to go down your family line to find members of KKK who want to kill African Americans and how far would I have to go to find members of Nazi party who want to Kill all the jews?
I really don't want to hijack the topic here, but I think comments like that are just ignorant and stupid.

[Ray]

@ A_Muslim 1st post: I have tried comparing prices Halal meat is almost always more expensive actually I have realized that anything that is "Halal" or permitted for muslims is more expensive than "Haram" counter parts...

[A_Muslim]

@Ray (2nd post): Halal meat being less expensive is counter-intuitive. You'd think there are overhead cost in transferring halal livestock, having extra cleaning, etc and everything associate with halal/kosher slaughter of animals. But personally, I found halal meat to be cheaper. Maybe it's the economy of scale and competition where I live. There are about 10 halal butchers around. Halal meat bought from the mom 'n' pop type store is not very fancy as I said before. The packaging is not flashy and there's not marketing cost. This is why halal is cheaper in my city.

I've never actually did cent-by-cent price comparison of halal vs non-halal meat product. I'm going by the halal grocery store tonight after work to buy some things. I'll be sure to snap some picture of price tag and compare the price.