Pyramid is used to in different needs analysis. Food, behavior, money etc.
When analysing why people do what they do, Abraham Maslow, a humanistic psychologist, developed a simple tool to explain why people do things. This is called Maslow's theory. He and other researchers found that people were motivated to do things by their basic human needs. He put these needs into the shape of a triangle with the basic human needs - Physical, Safety and Social needs at the bottom and the higher human needs like Self esteem, self fulfillment at the top.
Working on the same principle, a good financial plans must address the basic needs first before the social and emotional need.
So doing it as a pyramid, its often represented as shown in this figure
Financial plans fail when the pyramid is not balanced as it should be. If priorities on the top of the pyramid are addressed before the base, it would end up in a out of balance and hence fail.
This is a simple but a very effective tool I use to analyse any financial planning. You can review yours too and send in your comments. Swarna
When analysing why people do what they do, Abraham Maslow, a humanistic psychologist, developed a simple tool to explain why people do things. This is called Maslow's theory. He and other researchers found that people were motivated to do things by their basic human needs. He put these needs into the shape of a triangle with the basic human needs - Physical, Safety and Social needs at the bottom and the higher human needs like Self esteem, self fulfillment at the top.
Working on the same principle, a good financial plans must address the basic needs first before the social and emotional need.
So doing it as a pyramid, its often represented as shown in this figure
Financial plans fail when the pyramid is not balanced as it should be. If priorities on the top of the pyramid are addressed before the base, it would end up in a out of balance and hence fail. This is a simple but a very effective tool I use to analyse any financial planning. You can review yours too and send in your comments. Swarna
