Let’s Pay Zakat

Zakat, the fourth pillar of Islam, is an obligatory for Moslem (by financial situation). According to Wikipedia, Zakat is the Islamic concept of tithing and alms. It is an obligation on Muslims to pay 2.5% of their wealth to specified categories in society when their annual wealth exceeds a minimum level (nisab).
As follows, I try to elaborate several types of Zakat:

Zakat Fitrah
This kind of zakat is paid near to Eid-l Fitr. The amount is equal to 2.5% of our wealth and assets or as much as 3.5 liter of our staple food, such as rice. In short, it can be given both by cash or rice.
Zakat for Profession
Zakat of profession is zakat which is paid from one’s income when it already reaches the nisab.
Method of calculating zakat of Profession:
(Salary+ bonus + other income) x 2.5%
Zakat for Gold/Silver
Don’t forget to pay zakat for the gold or silver that you collect. It’s an obligatory both for the gold/silver that you are wearing or keeping. Nisab for gold is 85 gram while for silver is 595 gram. The level which is has to be paid is 2.5%.
The method of calculating zakat of gold/silver
(The gold/silver kept-the gold/silver worn)x 2.5%
Miss Nita has 150 gram of gold, 40 gram of which is worn. After having all of them for one year, how much that she has to pay?
(150gram-40gram) x 2.5%=2.75 gram or equal in cash as follows:
If 1 gram of gold is Rp.100.000 then 110 gram of gold is Rp.11.00.000. The amount that must be paid is 11.000.000 x 2.5% or 275.000.

Zakat for Saving or Deposit Account
Pay the zakat from the last balance of our saving account if it already reaches its nisab and exists for one year. The nisab is 85gram of gold and the level of zakat is 2,5%. Amount that is subject to the zakat is: saving + interest.
If you have a deposit account amounting Rp.10.000.000 with profit sharing Rp.350.000 per year, then you have to pay Rp.10.350.00 x 2.5% = Rp. 258.750. If your deposit account is a product of conventional bank and you receive interest, then you have to take out the interest (distribute the interest in infaq).
Zakat for Investment
This zakat is paid from our investment gain, for example income of car, house, or land that we rent. Therefore the amount that must be compensated is the revenue and not the capital (like car or the house).
Pak Parno owns a boarding house with 20 rooms. The rent fee for each room is Rp 200.000/month. Every month, Pak Parno spares RP.500.000 as the maintenance budget. How much Pak Parno should pay?
The nisab of the investment is as equal as 653kg of rice with 5% tariff of the gross income and 10 % tariff of the net income. Every month, Pak Parno gains Rp.4.000.000 (20 x Rp.200.000).
As follows, find two ways of calculating his zakat:
Gross: Rp.4.000.000 x 5% = Rp.200.000
Net : Rp.4.000.000 – 500.000 = Rp 3.500.000 x 10% = Rp. 350.000

Salary Management

A classic problem usually faced by some employees is salary management. Of course, we want to afford all of our needs. We want to pay our credit card, buy clothes or save some of them in saving or deposit account. However, not rarely in the mid of the month, the deficit comes along and it makes us more frustated:-(

How it doesn’t make us frustrated if no matter our salary is, it’s never able to fulfill our needs. Even worse, we can’t save them for the rainy day.

Probably, we never realize that such deficit is caused by some mistakes. One fatal mistake that keeps being repeated again and again is we never list our cosy. The money that we eran flows unnoticed. This mostly happend to new employees like me who want to enjoy the money i get. Another mistake is we often fail to differentiate our want from our need. Therefore, we need what’s called salary management.

Mostly, people have 20-30 expense cost. However, be careful, because not all of them are needs. What we should bear in mind is the salary that we earn isn’t aimed only for fulfilling our need but also for the saving. According to financial experts, there are four posts in to which we have to divide our money. They are:

  1. Daily Life Post
  2. Debt Installment
  3. Insurance expense
  4. Saving and Investation

from the four above-mentioned posts, which one that’s prioritized most?

First of all is debt installment. Why? It’s because we wont feel safe if we keep being haunted by the debt collector, will we? For this post only, we can devote 30% of our salary at maximum.

The second priority is saving and investation(if you have). This post is very beneficial for us in teh future. At least, spare 10% of your salary for this post (the bigger, the better actually). Shoutd you don’t have any debt, this post can be lifted up to the first priority.

Paying insurance premi is the third one. The portion for this post can range from 20 up to 30% of your monthly salary. Say for example you don’t have any insurance, you can skip to the next priority. However, if you’re interested to buy, watch out the rule!! The game rule is “dont buy too much insurance”. Just choose the one which can anticipate the risk and take the premi which’s in line with our financial capacity.

The last priority is daily expense. It comprises cost for daily meal, transportation, entertainment, etc. Why is putting this one at the last? It’s becuse the nature of this post is flexible. In the other words we can say that we can consider which  need that can be reduced. For example, we can skip our want to buy clothes thish month if we have bought the new one last month. Ideally, this post takes 50% of our salary.

Dont forget to list all of your expense. This is useful to ensure that our money’s spent to the correct post.

My Financial Management

Every month, I spend half of my salary for saving. I have two different accounts in different banks. One is for my payroll and another one is dedicated for saving. However, I am usually tempted to withdraw my saving, especially when I want to buy something, such as clothes. Actually, I have a special budget in my overhead cost for buying apparel or shoes. Yet many times, I couldn’t resist the enticement to get more money to get more things, beyond my actual budget.
Luckily I have a great financial advisor who suggests me to use online deposit. By that product, I don’t have to open new account. Simply by activating my internet banking and shortly I can save my money to the deposit account. And I started it this month. A half of my saving was transferred to the deposit account, and the rests were kept in other products. Besides, beginning next month, I invest my money to an insurance product (regardless the fact that my company affords all my health cost). Though, I still can claim my money even I don’t experience any illness (I can use it for traveling someday.
My financial advisor always keeps saying to me to manage my liquid money in my saving. He says it’s very effective to reduce my willingness to withdraw my money. So, now I always leave my liquid money only in a certain amount. It’s working now and I am so happy
Ps: Thank you so much my financial advisor. I am so lucky to have you