Author Archives: Joe Bradford

About Joe Bradford

About Joe Bradford

Joe is a structuring advisor for a major real estate development firm, specializing in Shariah compliant investment vehicles. He runs a financial advisory. He is the founder of Muslim Money Guide and also blogs at

Do I pay Zakat on savings only or on my checking account too?

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zakat on savingsQuestion: Do I pay Zakat on my Savings only or on my checking account too?

Answer: Zakat is due on ANY surplus wealth. It must be more than the Nisab and is in your possession after one year passes. This includes: Savings accounts, checking accounts, actively invested shares or Mutual Funds. It also includes cash on hand, gold and silver (bullion or jewelry, etc). If you own a business it includes any inventory or property which is currently for sale, as well as business accounts (similar to those above).

Example: Ahmed owns his own business. He has a savings account with 10k and a checking account with 4k. He also owns a car posted on Craigslist for sale at 8k. His business account contains 4.5k, and he does not own any business inventory. He has possessed Nisab for one year, and he usually pays his Zakat on the 1st of Ramadan. He will pay 2.5% on 26,500 USD. He will pay 662.5.

Don’t see what you’re looking for here? Try our Zakat page for more information.

Should I pay off my debts or build my savings?

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A common question that people ask me is:

Should I pay off my debts or build my savings?

To answer this question, let’s look at three things:

Assess How Much Time You Have

When deciding whether you should pay off your debt or save for later, you need to take into consideration something even more important: time. Through compounding, small contributions that you make now to your retirement or education funds grow significantly, allowing you enough latitude to do both simultaneously.  If you are starting late in the game, you need to prioritize.

Prioritize Your Debts

Figure out which debts have the highest interest rates, then pay those down first. Usually credit card debt is the biggest factor, then student debt. Trying to save or invest while you have high interest rates is like trying to win the Tour de France on a stationary bike. You won’t go very far, and you’ll expend way too much energy without any progress. Think of every high interest rate debt paid down as a gain. Paying down a debt that collects 15% interest is equivalent to savings that amount in the future (because you aren’t paying it!)

Think of it this way: If you have 10k invested earning 2% and another 10k in credit card debt that you pay 15% on, you’re losing money. Want to remedy this problem? Pay down your credit card debt first, then schedule for reoccurring debts. After that, look into investing and saving more.

When considering your debts don’t forget your debts to family and friends. You may not have a promissory note between you and they may not be pressing you to pay, but you don’t want put those relationships at risk and you certainly don’t want to risk your afterlife.

Focus and Create a Plan

Unless you hit the road with a plan, you’ll always struggle. After reading this, here are your action items to move forward with:

1- Budget for your expenses.

2- Understand the debt you owe and how much you’ll end up paying.

3- Create a strategic plan to pay off your debt, then look into saving and investment.


20 Questions on Zakat: A quick and easy guide to understanding Zakat

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1. Who has to pay Zakat?
Zakat is due on the wealth of any Muslim, young or old, male or female, that is held in savings for one calendar year and is more than the Nisab.
Example: If both you and your children have separate savings of 1000 dollars or more for one year, you must pay the Zakat on both accounts, not just yours. $25 for your savings, and $25 for your childs.
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