Financial Planning
Why is Financial Planning Important?
By Team Shepays
2 days ago
Self-actualization is said to be the ultimate need of a human being. Once attained, it is said to be the highest form of psychological development of a person. However, to understand how self-actualization can be reached and how these needs can actually be met because of successful financial planning, we need to understand the remaining four human needs classifications established by Maslow in his famous Hierarchy of Needs.
On the base level of the pyramid, we have physiological needs. These are the needs of a human to have access to proper food, comfortable clothing, a decent shelter, access to safe, hygienic drinking water. This spectrum covers the biological needs of a human being. The fulfillment of these needs is the primary goal of a human, as they cannot survive comfortably without it. The financial planning of a person wanting to fulfill these needs will focus on the basics and have a sustainable source of income and tremendous savings. This category of needs or the need for survival is the first step of the pyramid. Once attained, a human being will then move to safety needs.
The safety needs of a person are their needs to be safe, secure, and protected. Their assets need to be well insured, and the person has to have security in life, like having employment. The financial planning of a person navigating their safety needs will also focus on tremendous savings and exploring insurance policies. After having the survival needs met, the person looks out for having access to resources, property, etc. At this point, the need for having a bank account with a trusted brand comes into the picture.
The third category of needs and the third pyramid level is the need for love and belonging. A human being with adequate food, shelter, clothing, social security, and a stable job or property will now seek this. The person will need a family to share things with and friends to hang out with, and the need for intimacy. They need a sense of connection and to have intimate relationships. Financial planning for this person will include a fixed amount of savings every month in their bank account, along with scope for some expenses like hanging out with friends and family. One might also need loans at this stage to upgrade their lifestyle and consider marriage or family planning.
The penultimate need is the esteem need. A person who has fulfilled his physiological, safety, and belongingness needs further looks for self-esteem. They wish to be recognized in society, have a name for themselves, and attain power and respect from fellow society members. They now need a sense of achievement, praise, recognition to fulfill their self-esteem. At this stage, a person's financial plan may include sending their children abroad for higher studies. It will also make space for their inclination towards being an active member of their respective society.
Now comes the need for self-actualization, which can only be sought after once the other four needs are met. A person having reached self-actualization will have the ability to exercise their full potential. They are in the state of mind to express their creativity to the fullest and have the resources, time, and interest to be of service to others on a large scale. According to Maslow's hierarchy, such people have gone through all the other levels of the pyramid, i.e., they have been through the remaining four needs. At Shepays, we recognize the power of reaching one's full potential and help you reach this need of self-actualization by a successful model of financial planning.
Financial planning is not a one-size-fits-all approach; it is a unique offering. At Shepays, we understand that and work to deliver it. Every individual will have a customized financial plan based on their age, needs, and financial goals. A 26-year-old woman wanting to get married will have her physiological and safety needs met; she now has the space to open up to an intimate relationship. However, a 45-year-old homemaker, mother of two children, and wanting to start up can be said to be exploring her esteem needs.
Thus, if you are young and have just started earning or considered the idea of saving, you can see how, to reach self-actualization, you need a solid, foolproof financial plan. The financial plan cannot be constant throughout - it will keep changing based on the external environment, the financial conditions as well as will accommodate your changing financial goals.
What is a successful financial plan?
A successful financial plan will help you navigate across all your needs, and its ultimate goal will be to reach self-actualization. The plan will first ensure your physiological needs are met, followed by which it aims to secure you. Once accomplished, it will give you the scope for a content family life followed by working towards your esteem needs. Then comes the time to explore self-actualization.
What is Maslow's Hierarchy of Needs?
It is a five-tier structure of human needs developed by the famous American psychologist Abraham Maslow. According to this pyramid of needs, one will not want to fulfill a higher level need unless the lower level need has been fulfilled. Thus, self-actualization is the ultimate form of need that will come into the picture only once the physiological needs, safety needs, sense of belonging, and esteem needs are fulfilled.
Can a middle-class person attain self-actualization?
Yes, a person in that economic stratum of society has all the means to attain self-actualization. With the help of a solid, foolproof financial plan alongside proper guidance from their financial advisors, even a middle-class person can reach self-actualization.
Can my financial plan be the same as my colleague's?
A financial plan is not a one-size-fits-all approach. It is a unique and customized plan based on one's age, needs, economic status in society, family goals, career goals, and constantly changing economic conditions. So no, your financial plan cannot be the same as your colleague or friend - it can be very different.
Can I have one financial plan for the next 50 years?
In the present times of highly unforeseen circumstances, volatile economic scenarios, and constantly changing rules of the finance world, the financial plan needs to be highly adaptable. Not only will it keep changing or adapting based on the changes in the external environment, but it must also have the ability to accommodate your changing goals and financial priorities. Thus, one cannot expect the same plan to last for so long.
Is it tough to attain self-actualization?
If you start at a young age with us, we make it easy for you to meet all your financial needs and help you attain self-actualization. Thus, reaching self-actualization is not a tough but worthy task, and one must keep it as the ultimate goal of their financial plan. Starting early gives you the added advantage of being comfortable with your finances at a young age.