Ramadan 2022: five money lessons to learn during the holy month

The importance of delayed gratification, community, self-reflection and how charity can bring joy can also be applied to our finances

Mosque staff arrange food items before sunset outside Al Farooq Mosque in Dubai. Lessons learnt during Ramadan can also be applied to people's finances. EPA

Ramadan is the ninth month of the Islamic calendar and a period of fasting, reflection, community and faith. Traditionally, Muslims worldwide fast between sunrise and sunset and engage in devoted prayer and acts of charity during the holy month.

But did you know that Ramadan can teach us important lessons that we can apply to our finances?

There is knowledge to be derived from Ramadan traditions and practices to help us improve our money mindset — such as developing delayed gratification, the importance of community and celebration, the role of reflection and faith and how generosity and charity can bring joy to our lives and our wallets.

The first lesson is delayed gratification. One of the main aspects of Ramadan is fasting during daylight hours. Muslims refrain from eating, drinking, smoking and even negative thoughts during the day, breaking their fast with iftar at sunset.

One of the reasons for fasting is to develop patience and delayed gratification — the ability to feel hunger pangs and resist the temptation to eat immediately, for instance.

The idea is that you will develop the strength and resilience to control your urges and temptations — a crucial skill when it comes to developing better money management skills.

You must resist the urge to spend money impulsively and, instead, choose to save for the purchases you desire — to delay your gratification.

Building wealth over the long term requires patience to stick to a sensible investing plan and resist “shiny objects” such as meme stocks or forex trading. Such strategies often promise inflated returns over a short time in exchange for taking large risks, which often backfire and lead to losses.

Additionally, a large part of Ramadan is charity and generosity. Many Muslims increase their charitable donations during the holy month and offer food and gifts to those less fortunate than themselves.

When we reflect this in our financial lives and use our money to help people and donate generously, it increases our self-esteem, uplifts our mood and reduces the likelihood of impulsive or regretful spending.

We cultivate an abundance mindset, feel a sense of gratitude for what we have and realise the positive effect we can have on others. And if you don’t have money right now, offering your time or sharing a meal with someone less fortunate than yourself can have a similar effect on your mindset.

Another common theme of Ramadan is community — often, people break their fasts together and spend the month connecting with friends and family.

Muslim friends have shared with me that the knowledge that so many others are enduring the same challenge can help them power through the last few hours until sunset on more difficult days.

There is a commonality here for people who want to learn how to manage their money better. Joining a community of like-minded people on social media can help keep you motivated if you are paying off debt or working towards a big savings goal.

Alternatively, enlisting a friend, family member or a coach as an accountability partner can provide the support, strategies and tips you need on your financial journey.

Ramadan is also a month of deep reflection and devotion to faith. It is often cited as a time for self-reflection and the development of self-awareness. These are also crucial skills to cultivate as you pursue better financial habits.

It takes faith in yourself and the belief in a better future to improve your financial circumstances. When you decide to become debt-free or financially independent, it will not happen overnight and will take reflection on various strategies as well as self-awareness and iteration to discover what your values are and which methods work for you.

Finally, Eid Al Fitr marks the end of a month of fasting and is usually celebrated in style as people prepare to face the rest of the year with their improved habits and awareness.

Similarly, on long and sometimes arduous financial journeys, you will face challenges and overcome them, but you will also reach milestones worth celebrating along the way.

For example, if you have Dh100,000 ($27,225) worth of debt, focus on marking every Dh10,000 paid off and treating yourself to a celebration of the progress you are making.

That is how people reach big financial goals. Most people do not achieve success overnight but instead in small incremental steps, all of which are worth celebrating.

Alison Soltani is the founder of LeapSavvySavers.com