Assalamualaykum warahmatullah wabarakatuhu, #HappyInvestingFemales! Are you ready to take control of your finances, but not sure where to start? In today’s post, we’ll dive deep into setting up your smart autopilot budget system. It’s the first step in letting your money work for you, rather than you constantly working for your money.
At Her Islamic Finance, our mission is to empower Muslim women by guiding them to financial freedom through halal investing and smart money management. By implementing this system, you’ll unlock your investment potential and be well on your way to building financial security.
The Problem: One or Two Accounts Aren’t Enough
Most of the sisters who come to my coaching programs typically have one or two accounts to manage their finances. This is where things often go wrong. Why? Because having just one account for both your expenses and savings can lead to overspending, poor financial tracking, and a lack of clarity in your goals.
To set yourself up for financial success, you need a system that works for you on autopilot. This means setting up different accounts for your expenses, goals, and investments so you can organize your money effectively and avoid unnecessary spending. Once you’ve established this system, you won’t have to manually manage your budget every month. Your finances will practically manage themselves!
Step 1: Set Up Your Base Account
The first step in creating your autopilot budget system is to organize your current accounts. Start by having a base account where all your income—whether from a job, student grant, or family support—comes in. This is the account where you pay your bills and cover necessary expenses like rent, groceries, and utilities. For your smart system you want to set up automatic monthly payments of your recurring bills, to ensure a smooth process without having to put in the effort.
Once your bills are paid, you’ll also want to allocate money for conscious spending, like personal shopping or hobbies. However, before you spend anything, make sure to prioritize your financial goals and savings.
Step 2: Create Separate Accounts for Your Financial Goals
To avoid the temptation of spending money intended for your financial goals, you’ll need to create separate accounts. Whether you’re saving for a car, a home, or other personal milestones, having dedicated accounts will keep your savings safe and focused. This is also a powerful way to “pay yourself first,” honoring your future needs and goals before spending on things that don’t truly matter.
If you have multiple goals (which we encourage), you can either open a separate account for each goal or group them under one account. If you have a lot of financial goals, it may be impractical to open an account for each one. Instead, you can combine several goals into one account and use your bank statement to track how much you’ve saved for each. Just be sure to make separate payments for each goal so you can easily differentiate them when reviewing your account history.
Step 3: Build Your Emergency Fund
Your emergency fund should have its own account. This fund is designed to protect you in case of unexpected expenses like medical emergencies, car repairs, or job loss. It’s crucial to have enough money in this fund to cover 3-6 months of living expenses.
Step 4: Set Up an Investment Portfolio Account
Once your bills are paid and you’ve transferred money to your financial goals and emergency fund, it’s time to allocate funds toward your investment portfolio. This is where your money will grow, working for you instead of sitting idle in a savings account. You don’t need to be wealthy to invest—start small, and over time, you’ll watch your investments grow, thanks to the power of compounding.
Avoiding Riba: Choose the Right Accounts
When choosing accounts for your financial system, be cautious about accounts that may involve riba (interest). Many savings accounts offered by conventional banks may pay interest, which we as Muslims must avoid. Instead, opt for basic expense accounts or Islamic banking options to keep your money halal.
Start Your Journey Today
Setting up your autopilot budget system is the foundation for your financial success. Once you have your accounts in place, your money will work for you, helping you build wealth without constant effort. If you’re ready to take your financial journey to the next level, check out our Her Islamic Finance programs, where we dive deep into halal investing and financial empowerment for Muslim women.
By implementing this system, you’ll be on your way to mastering your finances and achieving your financial goals with ease. Ready to begin? Let’s get started on your halal investing journey today!
