Move Over, Maslow – Here’s the Personal Finance Hierarchy of Needs

You might have heard of Maslow’s Hierarchy of Needs,  a long-established theory in psychology. In it, human needs are characterized in a pyramid form, with the most basic, root needs at the bottom and the more aspirational needs toward the top.

Well, it’s time to take that concept and apply it to the world of personal finance! Introducing…..the Personal Finance Hierarchy of Needs.

Maslow’s Hierarchy of Needs

First, let’s review Maslow’s original hierarchy. In this, there are 5 levels: Psychological, Safety, Love and Belonging, Esteem, and Self-Actualization.

Here’s a summary of each level, starting from the base:

  • Physiological Needs: food, water, sleep, etc.
  • Safety: Security, Health, etc
  • Love and Belonging: Family, intimacy, friendship, etc
  • Esteem: Acceptance from others
  • Self-Actualization: Reaching your potential


Personal Finance Hierarchy of Needs

Taking a cue from Maslow, we can construct a Personal Finance Hierarchy of Needs.  Here, we can take some time to think about what’s truly most important – in other words, what we need to get done first, before worrying about the next level.

The levels of the PF Hierarchy of Needs are:

Base-level needs, Safety, Belonging, Esteem, Self-Actualization.

Here’s a summary, starting from the base

  • PF Base-Level Needs: Money for basic day-to-day expenses, such as food/water, simple shelter, and basic medical care
  • PF Safety: An emergency fund, insurance, and – last but certainly not least – retirement savings
  • PF Belonging: A comfortable, middle-class existence, including such possessions as a quality home and transportation
  • PF Esteem: Investments that can generate a decent amount of income on their own
  • PF Self-Actualization: Being financially free, not having to worry about money

In my version of the Personal Finance Hierarchy of Needs, you’ll see that an emergency fund, and retirement savings – at least a really solid start toward this – are considered quite important. In fact, you can see that these things are placed as being more important that a comfortable home or transportation.

Now, this isn’t to say that retirement savings must be present before moving out of a slum, but they’re certainly necessary before moving into that dream home with the white picket fence, so to speak. You see where I’m going with this.

My Questions for You:

Have you ever thought of financial needs in this framework, from base-level needs up to more aspirational “needs”?

If you created your own personal finance hierarchy of needs, what would it look like?


  1. says

    I see my needs exactly as you described. I have my emergency fund set up and now in a couple months I’m getting ready to invest some of that money. Since I have my fund I can now go out there and take a bit more risk to hopefully achieve financial independence. I view my life as a hierarchy of needs and try to splurge on things that are truly necessities. Taking this view on life I feel that I’m much more stable both in finance and in mind.

    Great article! You hit some great points home. :)

    -RavI Gupta

    • Squirrelers says

      Ravi – Thanks! Glad you liked it. It seems like you approach things intellectually as I do in terms of having a framework of sorts and thinking of things in terms of hierarchical needs.

  2. says

    I would completely construct my pyramid like you did.

    Which do you think would be easier, becoming self actualized psychologically, or financially? I am probably a lost cause psychologically…

    • Squirrelers says

      Everyday Tips – Good question. I think being self-actualized financially is a definitive concept than psychologically. We may be able to say we’re independent, but psychologically is there a limit to our interests?

      • says

        Good point. I may walk around telling everyone how my psyche is self-actualized, and everyone around me would probably say ‘she’s crazy!’. However, having financial independence is more clearly defined, unless you call taking advantage of the kindness of others as part of your independence.

  3. says

    This is a pretty sweet way of thinking! Im always interested in different ways to view the same topic/subject, and this is one of the most innovative that I’ve found. I think i’ll go home and make one of these for myself – right now though, I’m still in debt repayment mode so my efund isnt that big. Repaying debt will give me security though.

    • Squirrelers says

      Jeff – thanks, glad you liked this approach. I’m like you in that I find it interesting to see different ways to view the same subject.

  4. says

    That looks about right. I’d put another level between “needs” and “safety” for “high interest debt” but that’s me. If I didn’t have easy access to credit that level would be above safety.

    Can’t wait to self-actualize! (Actually, we’ll have to wait quite a bit… but it would still be awesome. Money Nirvana!)

    • Squirrelers says

      Nicole – self-actualization seems like such a nebulous yet amazing concept in bigger picture terms, and financially it’s appealing in the sense of having financial independence. Like you, it will be quite a wait for that state of money nirvana.

  5. says

    And to put it in finance/economics terms, how about capital structure? 😛

    Great post, as always, Squirrelers. Maybe I have a visual-learner bias, but a few pyramids like that make far more sense, to me, than a 93495340 book on the same subject.

    • Squirrelers says

      Thanks JT! As for capital structure, I can consider personal capital structure as meaning assets vs. liabilities. I can see this on the 2nd level.

  6. says

    Nice article, Squirrelers.
    I’m trending my investments & passive income towards basic physiological needs: food, water, shelter. Maybe I’m circling the pyramid?

    • Squirrelers says

      101 Centavos – Well, I think that’s the intended idea with the passive income….at least the most important use of it anyway, being the basic needs!

    • Squirrelers says

      Buck – well, to answer your question, I was a business major as an undergrad and went on to get an MBA as well. However, back in the undergrad days, I got a phych minor. This is where I was introduced to Maslow’s hierarchy. Good observation!

    • Squirrelers says

      Barb – thanks. Funny you mentioned your masters degree in counseling….I took a personality test recently (same one that many other Yakezie members took) and turned out to be an INFJ – which is a “counselor” type. So, perhaps it totally makes sense how this post could remind you of that masters program :)

  7. Squirrelers says

    Super Frugalette – thanks, glad you liked it. I actually stopped for few seconds when putting the pyramid together, and then decided that it would be appropriate to add medical care. Without that, many people couldn’t make it at all – and I’m not just talking about making it from a money perspective either.

  8. says

    Good application right there! I think most people settle for the first two levels. The base needs and safety needs. But what everybody should aim is the peak of the pyramid – financial independence. Every decision we make with our money should be backed with that goal in mind and a consistent practice of healthy personal finance is very important.

  9. says

    This is very brilliant. Yes, I see my personal finance needs exactly how you have described it. My goal is definitely to reach financial independence and enjoy the fruits of my labor, but to get there my basic needs and safety needs have to be met on continuous basis. Thanks for this article, I have a clear vision of my needs and goals.

    • Squirrelers says

      Jasmine – yes, it’s great to have those long-term goals…financial independence sounds great! As you put it as well, those daily needs need to be met on a continuous and regular basis as well. It’s like we really want to work for today’s expenses and tomorrow’s expenses as well.

  10. says

    I think you nailed it with this pyramid.

    One of the most important concepts in personal finance is to start simple and work your way up. I believe the reason so many people are uncomfortable is because they think it’s too complicated. But, taken step-by-step, it’s easy enough for anyone.

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