There may be as many ways to set up and stick to a budget as there are types of spenders and savers. Here’s one more. By aligning your budget with Maslow’s hierarchy of needs, you may more easily prioritise your spending and align it with the things that matter most in your life.
Photo by User:Factoryjoe.
Maslow’s hierarchy of needs, if you’re not familiar, is a theory that organises universal human needs in order of priority, with the most fundamental ones at the bottom. When you’ve climbed up through the bottom four levels, you have the freedom to reach your full potential.
Luke Landes on Consumerism Commentary ties this psychology theory to budgeting: physiological needs (including food, water, clothing and shelter) should be accounted for first in your budget. Next, look at safety needs like insurance, expenses related to your work and utilities.
When those are covered, you can spend more on love and belonging: gifts, time/entertainment spent with friends and family, and charitable contributions.
Landes lists under esteem: work clothing, professional development, dining out and fitness (beyond basic health needs).
Self actualisation items include the extras: hobbies, holidays and luxuries.
You might agree or disagree with the levels he puts individual items (see his post for the full breakdown), but the general idea has merit, especially when money is tight and you don’t know how to prioritise your spending. It’s also just a fresh way of looking at your budget and your financial priorities. Couple this with the priority pyramid for financial goals, and you have a solid base for planning your finances.
Budget Categories Based on Maslow’s Hierarchy of Needs [Consumerism Commentary]