Maslow’s Hierarchy of Financial Needs

Whenever I feel lost and directionless, Maslow’s hierarchy is a quick way to reflect on my needs.

Am I being an irate asshole? Maybe I’m just hangry. Am I feeling petty as hell? Maybe it’s about my self esteem and need for belonging.

Since I’m writing more about the psychology of money, I started thinking about how Maslow’s hierarchy can help sort out the biggest questions about money.

How much money is enough? Will money make you happy? When can you retire?

You know… good first date questions.

Maslow’s hierarchy of needs in a nut shell: We have basic needs, followed by psychological needs, followed by self-fulfillment needs2.

Because the model is most often represented as a pyramid1, it makes intuitive sense that we want to establish our foundation first.

If I’m worried about going homeless, I won’t be too concerned with self-actualization through blogging.

In personal finance, we’re often trying to gauge how much money we need. I’ll thought it’ll be interesting to use Maslow’s hierarchy as a baseline to test against the prompt:

I need money for…

If you’re a fan of Maslow and personal finance, then you’ll find this exploration interesting.

Money for basic needs

Started from the bottom now we…still here!

“I need money for…food, water, warmth and rest.”

Rule 1 of life: don’t die. Without meeting our physiological needs, death is close.

It’s shocking that 815 million people worldwide—about 1 in 10 people—suffer from chronic undernourishment (United Nations Report, 2017). On the bright side, we’re winning the long term battle against hunger.

Contrast this against the $6600 on average that Americans spend on food (ValuePenguin).

On average, we spend 60% of our food budget on meals and snacks we eat at home, and we spend 40% of our food costs on eating out.

As incomes go up towards middle class (~$70K/year), the higher the proportion that is spent on food. I’d guess a lot of this extra spending goes towards higher quality or more nutritious foods.

What about safety needs?

“I need money for…security and safety.

Imagine the refugee who flees her country or the immigrant who moves for a better life abroad. These often come at great personal cost, but they’re betting on the investment to pay off because the alternative is much worse: violence, poverty and religious persecution.

Sobering statistic: there’s an estimated 26 million refugees worldwide and 80 million forcibly displaced people (UNHCR, 2020).

People need money—or resources—to spend on truly basic needs to survive.

Financial advice about basic needs are usually misdirected because they’re actually about luxury goods, like whether $5 lattes or buying a home is a good idea.

It’s the next rung of Maslow’s hierarchy that gets interesting.

Money for psychological needs

“I need money for…belonging, love and self-esteem.

Using money to meet our needs at this rung, and above, is where we start getting into trouble.

While money is a great vehicle for meeting basic needs, it can be dangerous if used for psychological and self-fulfillment needs.

Love can’t be bought, even if you give good gifts. This this one of the core lessons from the Great Gatsby.

Gatsby spent a lifetime acquiring wealth to win the heart of Daisy Buchanan. In order to do so, he conducted illegal business with the mob, threw lavish parties at his mansion, and tried to fit into a society that he felt like outsider to.

We don’t need to be like Gatsby to feel the allure of self-comparison.

In 2019, 48% of millennials “Spent more money than they can afford to participate in experiences with friends” because of what they’ve seen on social media (Charles Schwab). I bet that this figure is probably under-reported.

It’s not just keeping up with the Joneses anymore. It’s keeping up with the Kardashians and the endless stream of influencers humblebragging on their jet-powered yachts.

Marketing works by targeting our insecurities in what we don’t have, built on the idea that we’re not enough. Multi-level marketing companies (MLMs) and pickup artists are were especially good at doing this.

The price of chasing status with money is the need to make endless payments for validation.

Using money to get belonging is not a good investment. If anything, money can attract the wrong kind of relationship to your life.

Lottery winners often have extended family (and strangers) show up out of the woodworks, looking for handouts. That, combined with a lack of financial discipline, leads lottery winners to go bankrupt a few years after winning.

There’s a healthy way to balance this. If you want to build a social community, there are ways to leverage money. When I first started second-degree dinners, I bought groceries and made dinner. It cost less than dining out for one fancy meal.

Paying for access to high-caliber networks can be a worthwhile investment.

Joining the Entrepreneur’s Organization, rushing Greek life at a university, or taking a Landmark program all require a price of admission.

In this example, it’s important to distinguish that someone’s using money to access a high quality network, and not to buy external validation from that network.

Money for self-fulfillment needs

“I need money for…self actualization.

Self actualization means being on the path to reaching your potential, in a way that feels authentic to you.

Now throw money into the mix.

If someone’s idea of their potential is to be a millionaire…what happens once they have a million dollars?

Do they get whisked off to a secretive millionaire’s club and forever to get laugh at normal people from an ivory tower?

While everyone deserves to be proud of their accomplishments, financial or otherwise, banking one’s identity on an arbitrary number is an empty game.

Using money to meet self actualization needs can even be deadly — suicide rates tend to be higher in wealthier neighborhoods, presumably because the rich compare themselves to even richer people. Not to mention that out of the 11 high income countries, the U.S. has highest suicide rate.

If contentment is part of self-actualization (and it should be), then the tragic stats on wealthy & famous people are enough to tell us that money doesn’t buy residency at the top of Maslow’s hierarchy.

“Once I become a millionaire, I’ll be self-actualized.”

Ha! No.

The question that isn’t asked with a goal like I want to be a millionaire is simply the follow up: what for?

Using money to achieve creative freedom is a worthwhile pursuit.

Many of us want to buy our freedom, and some may use a million dollars as part of a financial plan.

What about the desire to raise a ton of money…towards the benefit of society? That speaks to a level of self-transcendence3.

As long as we have a clear goal and don’t wrap up our identity with money, we stand a chance at riding up the Maslow elevator. What doesn’t get discussed as much is taking that elevator up and down.

Riding Maslow’s elevator

It’s interesting that Maslow never represented his hierarchy in a pyramid, which was popularized by the business management community1.

This has lead to some misconception of a linear hierarchy, such that once one level is “unlocked,” we stay put there.

What’s more true is that life is lived on a spectrum. Someone can occupy different parts of the hierarchy at the same time, or end up retracing their needs.

Just because someone is feeling in full creative flow doesn’t mean they feel deep belonging in a community. Just because I feel loved by my partner doesn’t mean I don’t get hangry.

But this also speaks to sense of mobility within the hierarchy. It implies that we don’t need to conceptualize the next level of success as something that always has to be bigger and bigger.

If anything, the pyramid visual points to the fact that if you’ve got your basic needs covered, that is the biggest thing to celebrate.

Upon reaching a certain level personal success (congrats), we can leverage the prior levels of Maslow’s hierarchy to enrich our lives.

If I’m feeling a lack of belonging, I can appreciate that I can still feed myself. If I’m frustrated at how far self-actualization seems to be, then I can appreciate my sense of belonging in my family or group of friends.

There’s a power for those who say grace before each meal. They’re flexing their gratitude muscle by training their brains to be appreciate of the small, everyday things.

What’s the point of all ambition if we can’t enjoy the smell of a flower?

The enjoyment small things is an undervalued ability.

Enjoying the smell of the flower. Relishing conversations with friends. Savoring the taste of coffee.

The bigness of life is inversely correlated with the appreciation of small things.

This helps us flip the script from “Once I have enough money, I’ll be happy…”

To: The less I need, the more content I am.

Because the one who doesn’t need more has won the game of life.


  1. Maslow never represented his ideas in the now-famous pyramid model. A psychologist named Charles McDermid was most likely the first one to do this (source). Here’s a Youtube explainer.
  2. “It’s difficult to find any evidence that he ever actually represented his theory as a pyramid. On the contrary, it’s clear from his writings that he did not view his hierarchy of needs like a video game– as though you reach one level and then unlock the next level, never again returning to the “lower” levels. He made it quite clear that we are always going back and forth in the hierarchy, and we can target multiple needs at the same time.”
  3. Towards the end of his life, Maslow critiqued his own ideas about self-actualization and suggested self-transcendence, which shifts from an egoistic point of view (how can I reach my potential) to a wider point of view (contribution to humanity).

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