When her 16-year-old daughter splurged her entire first paycheck on music for her iPod, one desperate mom turned to Abraham Maslow for solutions to such reckless spending. “Save your money for things you need!” mom demanded.
Maslow’s Hierarchy of Needs suggests that all human behavior is based on certain needs at each stage of our lives.An American psychologist, Maslow (1908-1970) introduced his Hierarchy of Needs over 80 years ago. Some experts still follow his theory, applying it to various areas of human life.
Maslow’s hierarchy is often displayed as a pyramid with the lowest levels of the pyramid devoted to the most basic human needs, such as food, water, air, sleep, safety and security. Our needs grow more complex as we age. The same needs progress toward the top of the pyramid for everyone. According to Maslow, fulfilling those needs throughout our lives is what makes us happy. If you apply his theory to using money to enjoy your life on earth, here’s how you might spend it, starting at the bottom level of the pyramid:
Spend the largest portion of money from your first job on things that are vital to survival:
Food | Water | Air | Shelter | Sleep
Physiological needs also include such things as clothing that keep us protected from the elements.
Need for Security and Safety
Start saving at this stage so you can afford to satisfy other important needs throughout your lifetime:
Financial Security | Safety | Good Health
Find a good job, start saving for emergencies, progress to saving for the future, spend money on other means of safety and security, such as health insurance, reliable transportation, adequate space to live.
Invest in activities that enhance social relationships with friends, family and others.
Friendship | Family | Social Groups | Church | Community
Look for love, acceptance, and belonging through emotional relationships. Join and support religious groups, sports teams, book clubs, other group and community activities.
Need for Self-Satisfaction
When all three lower levels of need are satisfied, we seek respect and appreciation from others. At this stage, our needs include:
Accomplishment | Recognition | Prestige | Personal Worth
Spend money on professional development, self-improvement books and courses, personal interests, avocations, etc. Make contributions to society by donations, volunteering, supporting community causes.
At the top of Maslow’s hierarchy, he puts the need for self-actualization, or achieving our full potential:
Express Yourself | Tackle Your Bucket List | Leave a Legacy
Spend your money on things you always wanted to do but didn’t. Work on the legacy you want to leave.
According to Maslow’s theory, saving money for the future is a necessary component for a happy life. Start now!!
Manage Your Money . . . financial facts for a brighter future provided by Advancd Asset Management LLC
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