Original Paper : Framework of Islamic Financial Education and Literacy

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Original Paper : Framework of Islamic Financial Education and Literacy Financial Education, Financial Planning, Islamic Finance Literacy, Shariah

The rapid growth of the global financial sector is considered an important factor for the economic development of the nation. Despite the growth, there have been several financial crises in the world due to many reasons. One of them is the lack of financial education and literacy in the marketplace, especially among investors and consumers. Due to the lack of financial education, customers take heavy debt without having the sources for the repayment of the debt and bankers create and sell complicated financial products to customers without due diligence. This paper focuses on financial education and literacy from the Islamic perspective. Financial literacy means having knowledge and understanding of the financial matters related to banking, real estate, insurance, investing, saving and tax planning. In the context of Islamic finance, additional elements are added to the portfolio of education and learning such as faraid, zakat calculation and retirement planning, Shariah compliant investment, Shariah rulings related to financial dealings, debt management and partnerships. Every human being has the right to learn about how to plan their financial affairs. The government, which represents an important pillar in building financial education, has a great role to perform which is to support people in having financial education from childhood so that they can plan their finances soundly for their education until retirement. This study emphasizes the importance of financial education and literacy by providing a framework of the financial education that can help regulators, financial institutions, customers and the public in understanding the basic needs in financial education and the ways to achieve financial literacy to
ensure proper financial management. The tools, techniques and procedures for good financial education are explained in the paper.