Financial Planning Framework: Empirical Evidence on Muslim Households in Malaysia

Hafizah Mat Nawi


This study aims to examine the determinants of financial planning practice and knowledge. The sample of this study is the net deficit and net surplus Muslim households in the Northern Corridor Economic Region of Malaysia. Adopting a positivist paradigm, the research design was drawn from a survey of 200 households; comprising of 100 net surplus and 100 net deficit households. The survey data were analysed using statistical techniques, which include a series of binomial logistic regression models. Results reveal that the hierarchy structure for the net deficit households involves moving individuals from the bottom of the hierarchy to the top. They moved from money management level to emergency planning level and finally to the investing for goals type. Alternatively, the roles of the net surplus households relate to the supply-side of the Islamic financial planning framework. This group contributes to the necessary funds such as zakat and awqaf, to implement the approaches related to three variables; namely money management, emergency planning and investing for goals. Results highlight that both groups appear to have a poor understanding of the concepts of zakat and awqaf. This study makes several important contributions to the existing studies of Islamic financial planning, particularly in the development of a model of Islamic financial planning practice and knowledge. The model integrates factors related to “investing for goals”, “emergency planning” and “money management” with the added components of financial inclusion, financial literacy, zakat and awqaf. In addition, this study provides meaningful insights into personal financial planning with relevant implementations to academics, individual households, financial providers and policymakers. The research findings should assist households in making optimal financial decisions. Findings also help policymakers in formulating an appropriate policy on Islamic financing planning.


Muslim households; NCER; Logistic regression analysis; Money management; Emergency planning; Malaysia

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