Prodigality (Israf) and squandering (Tabdheer) are two words that have linguistic and divine (Sharia) meanings. The linguistic meaning prevailed amongst the people, and became detached from the divine meaning. So they started to interpret these two words in a manner other than that intended by Sharia. As for their linguistic meaning, prodigality means exceeding the limit of moderation which is the opposite of the middle course. As for squandering, it means wasting and eliminating the property. With regards to the divine (Sharia) meaning of the two words, prodigality and squandering mean spending money (property) on anything prohibited by Allah(swt). So anything spent the way Allah(swt) allowed or commended would not be considered prodigality or squandering, whether it was little or great. While anything spent the way Allah(swt) forbids would be prodigality and squandering, whether it is little or great.The word prodigality was mentioned in the Qur’an in several verses:
“And those who when they spend are neither prodigal nor niggardly, and there is ever a firm station between the two” [Al-Furqan: 67]
So prodigality here means to spend on sin, while spending on the things which bring one close to Allah(swt) has no prodigality.

Squandering (Tabdheer) has a divine meaning which also means spending on the Haram things.

“And squander not (your wealth) in wantonness. Lo! The squanderers were ever brothers of the devils.” [Al-Isra: 26-27]
This means that the squanderers are like the devils in their wickedness, which is the greatest rebuke, because there is none more ‘devilish’ than Satan, and squandering means here to spend the property on forbidden matters.