ISLAMIC VS CONVENTIONAL IN TERM OF FINANCIAL PLANNING

What is financial planning? Is there an Islamic financial planning? What is the difference between Islamic and conventional financial planning? Do we need the Islamic one?… These questions disturb many people's mind.

Financial planning is an effort to render professional service to individuals, their family and their business, to provide impartial assistance in analyzing and organizing financial affairs in order to achieve financial and lifestyle goals. It is basically dealing with a man who engages in some forms of personal budget in term of wealth creation, wealth accumulation, wealth protection, and wealth distribution. The crux of a financial planning practice is the planning itself then the implementation of the plan and the monitoring of it. Terms such as man, wealth, and lifestyle goal that are used in the above definition are actually neutral and do not carry any value. These terms are known as generic concept of financial planning. The generic concepts are those concepts in a discipline, which identify the elements whose functioning and interrelationships form its subject matter. Definitely the generic concepts are free of philosophical underpinnings.

These concepts can not generate a world view as they are generic and lack a philosophical basis that defines the nature of their role, and the nature of their interrelationships in terms of the final outcome of their interaction. A worldview, on the other hands, is arrived at by giving a philosophical orientation to the generic concepts; when this happens the generic concepts are transformed into what the so-called "Primary Concepts". Therefore primary concepts redefine the nature, inter-relationships and the role of generic concepts in the system; predicting a unique universal outcome based on the chosen philosophical foundation. For instances: man, wealth or resources, lifestyle; are some of the generic concepts in financial planning but given the philosophical foundation of Laissezz Faire each of these concepts acquires a new meaning and identity; and their interrelationships deliver the final outcome which is different from that of dialectical materialism and Islam.

In the case of conventional that is either based on laissezz faire (capitalism), dialectical materialism and Islam, this is evident from the figure 1.:

As a result primary concept are actually the generic concepts with philosophical themes. When these primary concepts are stratified, they help develop a particular worldview.

Similarly by using the philosophical foundation of Islam, the generic concepts of financial planning are also refined and are transformed into the primary concepts that can be used to construct a worldview of Islamic financial planning.

	Capitalism	Islam	Socialism
Generic Concepts	Primary Concepts	Primary Concepts	Primary Concepts
Wealth /Resources	Scarcity of resources	Bounties of God and no scarce	Scarcity of resources
Ownership	Individual freedom	A Trust	The source of the exploitation of labor
Lifestyle goals	Personal Satisfaction (needs and wants)	Falaah (Prosperity)	Equal welfare among the proletariat
Figure 1. Primary concepts of Conventional and Islamic financial planning

Thus conventional financial planning is being value added with the specific philosophical underpinning. Consequently in the operational level, these concepts will be translated in the personal budget in every stage of creation, accumulation, protection and distribution of wealth.

Islam, on other hand, provides a worldview that is harnessed to private and public life of Muslims based on the revelation, qur'an and sunnah. Thus Islamic financial planning has been there since prophet Muhammad sent to this world to guide human beings. In Islam, a man has been respected and considered as vicegerent on the earth, as Allah says "Behold, thy Lord said to the angels: "I will create a vicegerent on earth"…(qur'an 2:30). As a vicegerent, a man has been ordered to serve Allah as He says "I have nonly created Jinns and men, that they may serve me" (Qur'an 51:56).