Psychology is a wonderful thing and a little application of some of the science that sits behind all the great psychological theories can pay dividends in your financial life too. Allow me to explain.
Accordion to scientific studies, 90% of people do not realise I replaced the beginning of this sentence with an instrument.
That was just a little jolt to remind you that we are not always completely aware of what’s going on in our own brains, before we get into this light trip around motivation and goal fulfilment.
It’s fair to say that Psychology is a vast, complex and interesting area of study, with branches that reach into every possible aspect of the human condition. But what I want to talk to you about in this blog, is the idea of ‘Self-Actualisation’.
Abraham Maslow first proposed Self-Actualisation in 1943 when he proposed his motivational theory often depicted as hierarchical levels within a pyramid.
Maslow suggests that we need to move through each individual level from the base up, resolving each one, to eventually reach a state of ‘Self Actualisation’.
Put simply, the process involves us overcoming our needs in a hierarchical order. Each need (or motivation) sets drives in play that help us to overcome one stage and move onto the next. Eventually reaching fulfilment.
Maslow and your finances
Once you understand the basic principle of Maslow’s motivational theory, you can apply it to all areas of existence. At Bridgewater Financial Services, we apply this science, in conjunction with you, to your financial goals.
In the same way that the hierarchy of needs proposes a pathway through life, we believe that an individual’s financial needs can be identified and pursued along the same structure as Maslow proposed:
Step One – PHYSIOLOGICAL NEEDS
Where Maslow identifies the fundamentals for survival (hunger, thirst shelter), in financial terms we equate this to budgeting, healthy cash flow and an appraisal of the current financial situation.
Step Two – SAFETY NEEDS
Maslow points toward protection for life’s unpredictable events (accidents, ill health). Financially this would equate to insurance, protection and provision for loved ones.
Step Three – BELONGINGNESS
Here Maslow identifies our striving for acceptance in our intimate relationships with our family and peers. Ultimately being resolves once we feel that we are an important person to those significant others. Financially speaking this is manifest in short and long term savings plans as well as pension provisions and legacy planning. In short, all those things we do for the future benefit of our family and ourselves.
Step Four – ESTEEM
According to Maslow, this is what motivates us to achieve high standing compared to our peers, driven along by a need for prestige and status. Financially speaking this is where we focus upon investment portfolios, creating a financial independence and non-reliance upon salary. It’s where we build upon existing wealth and protect against future financial uncertainty.
Step Five – SELF-ACTUALIZATION
This is the pinnacle of the journey of self. The reaching of one’s full potential. In terms of your financial self, this is complete financial security, which may lead to an onward exploration of philanthropic activities.
A clear path to follow
Maslow clearly lays out his pathway to self-actualisation, which depends upon each stage having been achieved before we can hope to conquer the next. It’s an established psychological principal for the drives and motivations of individuals and has found a place in many applied aspects of psychology.
Likewise, the principal of motivation and the striving for self-actualisation have found a place in our company’s unique approach. We call it “The Values Discussion” It’s a unique approach we use with every new client. It helps quickly identify the exact stage you’re at financially and the best way to achieve your goals.
As we believe that financial planning is inexorably linked to individual motivations and desires. Just as psychological goals progress in Maslow’s theory, we believe financial goals follow an established order too. Once one set have been achieved and imbedded into your financial status, then a new set of goals present themselves. It’s also vitally important that these are approached in the correct order. Just as the process of self-actualisation shows us a clear and linear path through the stages, there is also a linear path that should be followed in our striving for financial nirvana.
Your financial journey is also not something that can be shortcut. When you build a house, you start with the foundations and work your way up to the roof. You can’t hope to put the roof on a structure that hasn’t already been built with strong walls.
The same is true concerning your finances. If you would like to learn more about how our unique approach can significantly benefit you, then please get in touch.
If however you’re looking for a cure for your fear of spiders, then sorry that’s not us. But we would suggest you Google ‘Arachnophobia’ and ‘systematic desensitisation therapy’ around the topic of operant conditioning.