Author: Fahd Dameer

Let’s delve into one of the least spoken about threats to society, which in my opinion has the most significant impact — the wealth and income inequality, which in simpler terms means: the rich are getting richer, and the poor are already poorer and a middle class that is shrinking at an alarming pace.

The next 10 years

The next ten years are not going to be like the decade before it. We’re in for a very rough ride and the question we need to answer is this. “In the next ten years are we going to be richer or poorer?”

Around the world, the working class is pissed off. How else do you see a world stage where Brexit happened, and Trump is the president of the United States of America. People are tired of what’s happening around the globe economically, and the result of it is the modern political, economic and social landscape we have today.

While reading ahead, keep two questions in mind;

1. Why are the rich are getting richer and how?
2. In the next ten years, will we be more productive or more miserable?

I hinted earlier that in the next ten years, we are going to be faced with challenges the likes of which we have yet to see. Physics tells us that every reaction has an equal and opposite reaction, and similarly the next 10 years will unearth opportunities of a scale and quality not seen before.

Have you ever wondered why the middle class in today’s day and age keep shrinking? Where have they gone? 

Having thought about this a lot, I have concluded it’s because the economy and the world today is entirely different. What worked in the past doesn’t apply to the current day and age.

In the past, going to school, getting a job, saving money, buying a house, best set one up for success. This was a tried and tested formula that worked, yet this same formula applied today is why the middle class is disappearing because we live in a completely different socio-economic landscape.

Look beyond the classes

Let’s stop looking at things from a poor and middle-class point of view because in my opinion, we are following obsolete advice and it was the main reason it took me forever to achieve any forward momentum in life. I want to share with you how to see things from the rich standpoint.

Since the beginning of 2000, we have faced three major financial crashes. There was the infamous dot-com crash in 2000, followed by the real estate crash in 2005 and then came the banking and stock market crash in 2008.

These crashes had real repercussions and wiped out millions of people’s life. To add salt to injury the federal reserve bank started to print money, the biggest money printing spree in history which saw the interest rate drop to below zero.

How did this affect all the people who were saving money? Their money is being eaten up by inflation. 

To this day some people still put their money in the bank, trying to earn interest while inflation is far greater than what the bank is going ever to offer them. I cannot fathom why; do they not realize the pittance they are getting, and you are still saving money and chasing after the bonus interest rates they may be getting.

We detail the exact way that ‘saving money’ actually costs you more in a separate article.

As a Muslim, I don’t believe in making money via interest, but I want to ask the general public, what the heck are we doing? 

For people who are still saving money, I want to be brutally honest with you. You may disagree with me but I’m going to share it with you regardless. In today’s day and age, you cannot save your way into safety, security and wealth anymore.

We have way more educated people today than say, ten years ago. If that is the case have you ever wondered why we see a shrinking middle class? This is a problem, and I want everyone who has earned a degree, masters, bachelors or are still in college to think about today because we’re all in genuine trouble.

Were comfortable in our jobs and knowledge, ignorant about financial matters and this is our biggest downfall because we do not try and see a different perspective. 

I was one of those comfortable people, and till I lost my job, I didn’t understand how blind I was.

I went to a 9-5 job. 

I was earning a very comfortable salary, and I was paying tax. 

I owned the house I was living in and had money set aside in savings and was investing regularly. 

It wasn’t until I lost my job and had no income coming in that I realized how quickly money leaves your pocket.

97% of all university graduates including me, don’t know much about taxes. 

We don’t know how to pay fewer taxes to make the maximum benefit out of them. We have no idea and are afraid of tax. We don’t even realize the incentives that we may have available for us. 

There is a real need for workshops on how to use taxes to our benefits and if any of you out there know something about this feel free to reach out to us.

One of the most significant problems I had after finishing my bachelor’s and masters was how my education made me a little arrogant and cocky while being ignorant of the foundations of financial basics. 

I didn’t even know where to get started and what questions to ask. I was a highly educated poor person, who cared about what I knew and not about what I didn’t know.

I learned the hard way that the sign of good intelligence was asking the right questions. The reason I believe the middle class is going to disappear is that they went to school and got educated and learned nothing about money. 

That would be all bad news, but on the bright side if you were proactive and fill the gaps in your knowledge you will come out of it as a better person always. 

You will know the right questions to ask and what you might be able to do, to better your situation rather than sit there and rest on your Higher Education laurels.

The problem with individuals who have Bachelors, Masters, and Ph.D. is that they believe that they are going to be successful purely because of their education.

While I am not taking away from them the credit for the work done to achieve that, depending on a piece of paper alone to achieve financial success is tantamount to suicide.

We’re here today because I lost everything

My journey with finance started around ten years ago. It’s something I struggled to share with others for quite a while. 

It’s because I lost everything. 

Every dollar I had saved, I lost by trusting the wrong person. 

This incident in my life made me realize how much I didn’t know about finance. How I was living blindly.  I now think it’s surprising I didn’t experience a catastrophe earlier.

After this incident, I decided to educate myself and sought out a finance course, and it changed my life. 

Moin and I both have a lot in common. one of these things is that we went to good schools, grew up in loving middle-income families, and our parents provided us with the best of what they could afford.

This made my loss more jarring in a way and shook me to my core.

However, for all that, I am now thankful and look on it as a catalyst for learning and growth. Before that, I’d never learned about the basics of finances. 

Dummies for Finance, Finance for Dummies 

It’s kind of funny that being a dummy and losing all my finances led me to pick up a book perfectly titled “Finance for Dummies”

I was a sponge and absorbed the knowledge hungrily as I was going through this journey. I realized that I was looking up to the wrong type of people. 

I got fooled by what I now call proactive marketing. 

The people I looked up to may have had nice cars and lived in rich suburbs, but they were struggling financially. 

They had made a bunch of financial mistakes in their lives, and it held them back. Not only did these mistakes hold them back, but it slowed them down too.

What this epiphany did to me was make me realize that even though something may look great from the outside, you never know what’s happening behind anyone’s closed doors. People go to extremes to hide their struggles from the world. I put this down to the fear of being stigmatized. 

If someone had just shared a few basic things on finance with people like this, or with me before my incident, it would have dramatically changed our trajectory.

Finance only cares about one thing 

It’s a big reason behind why we started tabarruk, we want everyone to have a source to learn something the easy way, instead of the hard way like me and being forced to by circumstances, so if you learn something here, and like it, we encourage you to share and ask other’s to join us.

The great thing about finances is that it doesn’t matter how bad your situation is, you can always improve it. 

What matters is being brave and proactive. Finance doesn’t care how old or young you are, or how rich or poor you are.

All that finance cares, is that you are doing the right thing. 

It all starts with you putting a plan in place, and you will be able to see specific, measurable accomplishments like paying off your credit card, your loans. 

Having money in the account to pay your bills and then some can make you realize the potential it has in changing your life.

You control your finances, not the other way around

Having a positive control of your finances will change your life. If you’re in a relationship, it can be a breakthrough in your marriage or partnership with your significant other. You will find out that you’re no longer fighting about money and that you both are cooperating towards a common goal.

When I started managing my money, more and more people began to notice a difference in my demeanour. 

I was calmer and carried myself better, and after a little time had passed since my financial disaster, I was secure in the knowing of what was coming into my pocket and what was going out of it. 

I was not blindly throwing money at my bills and debts without a consolidated plan.

Being organized with my money brought a lot of unintended positive changes in my life. 

My relationship with my family dramatically improved; I was a better son, a better brother. And because my money was working for me, instead of against me, I was less stressed.

The three main ways in which money affects our lives are:

• Relationships
• Work
• Lifestyle

The most prominent struggle people face when coming up with a course of action is not having an idea of how they should live? Or how much money they need? Or if what they have is enough. I can assure you one constant thing is will be is, it will never be enough.

Let’s look back 5 years. You were probably earning half of what you’re making today. If your income has increased, how is it that you still feel you’re struggling? 

I cannot stress how important it is to have a plan in place to manage money. If you have a roadmap you will know what impact it has on our lives to stay on top of it.

At the end of this article, I want you to take action. I challenge you to use what you learn and give us feedback if it helped. 

The purpose of this article is to inspire people to take that step to get free and be able to pursue their dreams.

We weren’t created to work, pay bills and die.

Let me share with you some facts. 

The average household has 

• a credit card debt of $16,000, 
• a car loan of $28,000, 
• mortgages of $172,000 

These financial burdens have genuine physical manifestations in our lives.

They come out in the form of stress, migraines, depression, fear, worry, anxiety and these symptoms which consume people are the main reason I’m so passionate about teaching people the path to financial freedom. 

A little bit of education goes a long way in making a positive change in someone’s life.

I advise you not to go out looking for more statistics because it is depressing. What’s that? You like statistics?

Ok, then. 

82% of the world lives paycheck to paycheck, and that’s people with jobs. That’s an astounding number because this means 2.4 billion people around the world are just getting by, and that’s scary because that means most people don’t have enough savings.

These people are pretty much surviving; they don’t have a good plan, they don’t have much in the way of financial advice and are overwhelmed by their situation that when an emergency happens, they default on their payments.

The first to default is their credit cards, and because they don’t have means to pay it off, it adds to their problems. 

Disclaimer: I put my hand up and say that my Master of Science in banking and finance didn’t teach me anything about real-world issues. My parents and my failures in life taught me more than that piece of paper. All that my masters did was provide me with a false sense of superiority, which all came crumbling down when I hit rock bottom.

I want you to know that just because I have a plan doesn’t mean that I don’t have challenges, life is, after all, unpredictable. 

I am the provider for my family now. Last month my younger brother needed a new pair of glasses, and my younger sister needed $1000 for her course.

Life is always going to be challenging that being said if you’re prepared for it, you can hunker down during these situations, and it’s not going to knock you down and dictate your life.

Money is not the most essential thing in life; however, it is not something we can ignore. It affects our relationships, work, and lifestyle.

Relationship to money, money to relationships?

Your relationship with your partner or family may be your cornerstone in life and you would be surprised how understanding and learning to do ‘money’ better will improve your bond. 

Your communication with your partner may not be the best when it comes to money, could be because you have a different background, have different likes and dislikes and think differently. It’s heavy to talk about sometimes and even heavier to admit to another that things aren’t the best and that help is needed.

A simple strategy can help. At the beginning of every month before you spend anything, agree on a budget with your partner and decide on where the money is going to go. 

For this to succeed you need to make it safe to communicate objectively, open dialogue about all the money coming in and money going out.

By being transparent with each other, it will teach you to work as a team, when to say no and when you can splurge or reward yourselves. 

You have opportunities to set things up in advance. Having a budget will hold you accountable as a team to say no when the circumstances are not right.

If you’re single, your whole social life is dictated by money. Going for movies, coffee and your biggest struggle will probably be finding a balance between your social life and having a plan. 

Have a budget means setting aside a small amount for yourself and this will allow you to go out for a meal, coffee and when you do that knowing exactly how much you can spend you will be able not to spend money frivolously.

Your social life has to adjust to your priorities in life. 

Sometimes you have to tell your friends that your making a stand to be financially healthy. As a result, your closest friends will begin to notice changes, and you may influence them to make some positive choices in their own lives to nudge them on the right path.

Money affects every relationship you have, and it is imperative to understand this, which allows you to improve and have better relationships.

Work, work, work

The second part of our lives money effects is work. I mentioned earlier that 82% of people around the globe are living paycheck to paycheck. The sad thing is out of 82%, more than half of them would have quit their jobs if money was not an issue for them. 

They don’t like their jobs, and they are sticking out merely to pay their bills.

Money can keep you captive in a place you’re not content with, a position or career you’re not happy with sucking the lives out of you. 

So, loving your job is what you want, and if you’re not, you need to plan your finance so you can transition your life into something else.

Lifestyle is a choice

The third and last area that money affects is your lifestyle. Most people are too busy looking around and comparing their lives to other people’s lifestyles; it is human nature. 

So how do you determine what is the right lifestyle for you?

How do you decide where you live, what car you drive, the clothes you wear and what you do? 

How do you know whether that’s right for you? 

You would be surprised by the number of clues you have in deciding what lifestyle to choose; I think everybody knows what they need to be happy but chase after the wants to fulfil a false narrative in their minds.

Most people never struggle to live a lifestyle that’s double their income. 

However, ask someone to live with half of what they make, and you will see people fail to accomplish this.

Overspending is a trap I see many people getting snared by; How do I know? 

I know because I fell face-first into it myself.

It’s not as if people are earning $500 and spending $1000. It’s more like people are paying an extra $2 for every $50 they make. 

Over time, if you’re paying the extra 1000 dollars every year, you’re not feeling it at first, and you’re enjoying the lifestyle that is slightly beyond your means.

However, one day you might lose your job, or maybe there was an emergency and all of a sudden you feel the weight of some of those decisions you felt before. 

Some studies show having a little bit of money in savings, brings a lot of peace, contentment, and enjoyment to your life.

Hopefully, this article showed you how money affects you, and that money doesn’t take the place of fulfilment or happiness in your life. 

It’s a tool that helps you experience life positively.

Remember it affects your relationship, your work, and your lifestyle. So, getting money right is essential, and I hope you join us on this journey because we want us all to walk together for a long time and experience success together.

Learn all you can and share with those you care about to influence them positively. 

Read books and grow your mind and never stop learning.

However, remember that knowledge is not power on its own. Implementation of the knowledge, now that is power.

In today’s article, we talk about simple steps you can take to achieving financial freedom. 

Let’s start with what a liability and an asset is. 

Boring economic terms? 

Perhaps, but it’s a very important concept to understand as this knowledge is what separates the rich from the poor. The rich have an innate understanding of what liabilities and assets are.

So, let’s get straight into it, a not so boring explanation that is easy to understand:

A liability is something that takes money out of your pocket.

An asset is something that puts money into your pocket. 

Told you it was simple!

A House is a Asset Liability

Many people say having a home is an asset, but in truth, it’s a liability. I know that many of you might disagree with this viewpoint but let’s look at it with a simplified lens.

I ask “Is the house you live in putting money in your pocket or taking it out?”. 

With my house, the money is going out of my pocket as I am paying a mortgage. 

Many people live paycheck to paycheck and that’s because they buy a lot of stuff.

Today, I see many people buying a house because they consider it to be an asset. 

A house may grow in it’s ‘worth’ but I only consider a house to be an asset when you rent it out and have a surplus after making your mortgage repayments on it. 

For example, my mortgage is $1,430 per month. 

The monthly rental yield I can get from my property is $1,600 per month. 

If I were to rent my house out, I would make a net profit of $170, however, I am not. 

Therefore, I consider my house to be a liability. Glad you agree 🙂

What’s an Asset then?

So by our definition above, then, what is an asset? 

I consider dividend-paying stocks, businesses, rental properties and education to be an asset. Non dividend-paying stocks become an asset when they grow in value and you sell them for a profit.

Especially with education, if you were to learn something and apply it – it is an asset. 

I read an interesting opinion piece that stated Warren Buffet used to buy pin bowl machines which he put in barbershops, movies and other outdoor areas. This generated income for him without him having to be physically there. Over the years he invested the money he earned in more different machines, which he installed in many different locations, and this earnt him more money and this is how he got started.

The biggest reason people fear to invest money in assets is that assets could lose money. 

However, I find it surprising how no one ever stops and thinks about how: after purchasing a brand-new car from a dealership, your car’s is worth 20% less the minute you drive it away. 

Whereas with an asset like education, when you learn something that makes you money, you take that learning and repeat it to make more money. When you lose money from something you learn and apply, it’s still an asset because you hopefully won’t repeat that mistake.

Assets pay for Liabilities

Here’s another concept that underpins financial freedom:

Building an asset is the best way to pay for liabilities. 

Talking to many successful business people, I find that they always focus on building assets to make more money – in order to invest in additional income generating streams.

I also found out that when they do purchase liabilities, they have a minimum of two or three assets to pay it off.

I hear people asking each other “How much money do you make?”. This is the wrong question to start the premises of judging someone’s financial success. 

It’s not how much you make, its how much you keep

What you should ask is “How much money do you keep?”

Let me use a scenario to help you (and you can come to your own conclusion at the end of it). 

In the outer suburbs of Melbourne, live two young men, Alex and Ahmed. 

Alex makes 1 million AUD a year and Ahmed only makes 35,000 AUD a year. 

Alex spends 990,000 AUD a year. Ahmed spends only 15,000 AUD. 

After 12 months, Alex has a bank balance of 10,000 AUD. Ahmed has 20,000 AUD in the bank. 

Who is better off? Hopefully, your answer is Ahmed 🙂

I want you to rewire your mindset and realise how much money you keep is more important than how much you make. 

This is because the money you make leaves your pocket at the end of the day. 

If you are not in control of the funds you keep, you will never grow wealth and be in control of your financial freedom.

In the scenario above, Alex seems to be doing very well however he is living paycheck to paycheck. From the outside it may look dandy – he might have assets liabilities like boats and cars! 🙂

That means Alex over the years must keep working in order to maintain his repayments. 

The point I’m trying to drive home is that what you keep from your income is what matters. If you can increase what you keep, you can use it to work towards building an asset that over time will pay for your liabilities and you don’t have to rely on a job. Assets are the true way you can get ahead and on your way to financial freedom.

A common mistake

A mistake I made when I first started investing was that I was asking the wrong people for advice. 

A carpenter would know a lot about carving and sculpting wooden furniture. 

However, if you were to ask him what’s the best marble to sculpt a sculpture – you are asking the wrong person for advice. 

Similarly, if you’re looking to invest, you should ask the right people how to do that. They would be able to correct you if you are asking the wrong questions. 

As human beings we tend to gravitate towards the people we are comfortable with and therefore end up asking the ‘wrong’ people for advice. We ask our friends and family for opinions on matters that they are probably not subject matter experts in.

You are the average of your closest friends. For that reason, if you want to become better in life and push yourself forward, you must surround yourself with people who are successful or have the same mindset as you and are striving to make their vision a reality.

3 Rules to start

Another thing you may have realised is that assets almost always appreciate over time and liabilities depreciate over time.

You want to start searching for assets that appreciate over time and have a clear understanding of what liabilities are. 

The rich get richer by investing their money in assets, which generate the funds for them to invest in more assets.

Let me give you 3 rules you can use right now to start your investment journey and life in general:

• Rule 1: Think Assets
• Rule 2: Invest in Assets
• Rule 3: Repeat

This is so important because most of the people we surround ourselves with, are always talking about liabilities. 

Think about it – most people are always talking about the newest car, the newest iPhone, or the latest trend etc. 

If they are always interested in talking about liabilities, you will also be naturally interested in buying liabilities.

Now if you were to surround yourself with people who care about financial freedom, are chasing their dreams, and who pay a lot of attention to their investment (in order to build businesses), are looking for opportunities that operate themselves – you surround yourself with the right friends who are either doing it themselves or facing the same struggles as you would be.

These friends will push you forward through hard times, however, when you have friends that care about liabilities and talk about liabilities every day, you will not be able to move forward with them when you talk about applying the hard yards.

People say a rolling stone does not gather moss. In my mind – a stationary stone generates no momentum and I have no interest in gathering moss. To move forward in life, you must generate momentum. If a shark was to stay still it will die. It must keep moving forward and as a human being, you have to keep moving forward.

You must surround yourself with friends who want better in life and want the same life goals as you. It is because they are willing to go through the struggles to achieve a goal and they are willing to make sacrifices to get there.

So from this point onwards, I want you to always to think anything in life in terms of assets and liability and apply the three simple rules to build wealth. 

Is money coming into your pocket or is the money going out of your pocket?