Maslow’s Hierarchy Of Needs is a theory in psychology conceived by Abraham Maslow in 1943. The theory first appeared in his paper A Theory of Human Motivation. Maslow’s Hierarchy Of Needs is typically represented as a pyramid consisting of five levels — i.e., physiological, safety, love/belonging, esteem, self-actualization as the one shown below.
Maslow’s Hierarchy Of Needs As A Framework For Frugality
The topic of wants versus needs comes up often when we discuss frugality. However, there’s a lot of gray areas and differences in opinion on this subject. After I thought about this for a while, I recall something I learned in Biology called Maslow’s Hierarchy Of Needs which does a good job of clearly explaining “needs“.
Needs: Physiological and Safety Needs
The first two levels of the theory is a good definition of needs in the context of frugality. At this most fundamental level, we are looking to fulfill our physiological needs. If you need to save as much money as possible and practice frugality, this is the level where you should operate. Your primary focus is on fulfilling the basic human needs — such as, food, warmth, water, and other bodily needs.
Image from Wikipedia
The next level is also considered frugal and in the realm of needs. Safety needs is the desire for:
- Personal security
- Financial security
- Health and well-being
- Safety net against accidents, illness, and other adverse impacts
Many of these safety needs can be addressed by personal finance risk management techniques.
The comparison is clean and simple with respect to the first two levels: anything that falls within the physiological and safety needs are considered frugal. However, you should note that you could over-fulfill these needs and turn them into wants. For example, a basic home cook meal fulfills your need for food, but a fancy Filet Mignon and Shrimps dinner goes beyond your basic needs.
Other Levels: Love/Belonging, Esteem and Self-Actualization
Although next three levels of the Maslow’s Hierarchy Of Needs do not cleanly align to “needs” or “wants”, I would like to include them here for completeness and make a few observations. These levels include:
- Love/Belonging — The need to be loved and belong.
- Esteem — The need to be respected, to have self-esteem, self-respect, and to respect others.
- Self-Actualization — The need for achievement.
- You could be frugal and fulfill all of these needs.
- You could spend a lot of money and never fulfill any of these.
- By overspending money on “wants” and not addressing your physiological and safety needs, you could jeopardize the fulfillment of love/belonging, esteem, and self-actualization needs.
Other articles about Maslow’s Theory Of Needs:
- Combining Maslow’s Hierarchy of Needs & Personal Finance at My Money Blog
- How Maslow Can Help Your Online Business at Men with Pens
This article was featured in the 142nd Festival Of Frugality at Frugal Babe
Pinyo is the owner of Moolanomy Personal Finance and a Realtor® licensed in Virginia and Maryland. Over the past 20 years, Pinyo has enjoyed a diverse career as an investor, entrepreneur, business executive, educator, financial literacy author, and Realtor®.