Finally, my blog space is here. A place where I can fully share some of my thoughts, experiences, learning, observations and opinions about personal money management and life’s usual pursuits for success and happiness. I do hope my friends and readers will be able to benefit, in one way or another by following this site, commenting, questioning, suggesting and even challenging what is written in here. As an introduction, I would like to share a very important idea in money management, the hierarchy of financial needs. This is where most of my posts/articles will focus on. Happy reading to everyone!

In our pursuit for happiness and meaning to life, the Maslow’s hierarchy of motivational needs will come into play. On the other hand, if one wishes to pursue financial freedom, he/she should adhere to the hierarchy of financial needs.


However, Maslow motivational need is sequential, you cannot seek security without being able to meet basic needs; and you cannot seek belongingness without being secured, you can’t seek self-esteem if you don’t belong to a group, etc. Whereas, the financial needs pyramid is not sequential. This is the reason a lot of people are into some kind of kind of financial trouble even if they are four rungs above into the Maslow’s hierarchy. Why is this so?

This article aims to clarify the concept of the hierarchy of financial needs as a springboard to financial freedom. There are simply three major areas of concern about it, the first level is providing the basic needs of food, shelter and clothing, etc. or necessities. The second level is providing a cushion or protection from uncertainties such as emergency fund, health insurance, life and non-life insurances, and contingencies. Then, lastly, the third level is the investment need that takes care of our long term goals like retirement and education. Yes, investment is considered a financial need.

Let us tackle it one by one. First level is the basic need. Like that of Maslow’s we all have physiological needs that must be satisfied. Unfortunately, the word basic is quite abused. Most people expand their necessities before even putting some into protection. Ideally, when we are able to meet our basic needs, the next step is to build up our ‘buffer’ by setting aside contingencies and funds for protection, like health, non-life and life insurances. However for many, after satisfying the basic needs, some luxuries are being eyed right away, like travels, signature items, latest gadget, fine dining, new car, bigger house, etc., etc. There are so many things money can be spent on. In short, a life-style upgrade.

These would have been alright when all other aspects of the financial needs are met. We have not satisfied the other needs, why do we succumb right away to our wants?

Before, making any life-style upgrade, you should set aside 3 to 6 months worth of household expenses as a contingency. Put this into some liquid financial instruments and readily accessible. Then, secure the assets like the breadwinner’s health and income thru an insurance coverage. Then, secure any major assets as well. An extra contingency fund may help, say, some readily accessible funds in an ATM. Phase two is now complete.

Next is to level up… not on the lifestyle part, but, THE more important part, investments. Yes, before thinking of upgrading on some basic items, consider putting away money on investment instruments for, say, an educational fund and retirement. An investment fund may be created for a purchase of a dream house say ten years down the road or perhaps a dream tour. If you will reach this point of the financial journey, the realization is that the money is not enough. It is never enough really. Hence, the supposed to be upgrade where most people get into is actually a short term gratification that ruins long term, meaningful financial goals like the ones mentioned. These can only be realized if the first two rungs of the financial pyramid is properly handled.

In conclusion, one need not earn so much on being able to fund all the financial needs mentioned. It can be done with any income level. An allocation of income may be a good tactic, say, 50-30-20. Meaning, 50% of the income is allocated to basic needs, 30% to fund protection and emergency funds, and 20% for long term financial goals. One may take any ratio and proportion of income to be allocated to the three different financial needs is perfectly okay as long as the three needs are met. You might say, I think I can do 65-25-10 only. This is alright as well as long as you set aside a portion of our income to all three financial concerns. For, if your income increases, it should not mean an increase in your basic needs and wants, it would mean an increased amount in contribution for your protection needs and investment needs as well. By consistently doing this ratio, it paves the way towards your financial freedom.

And as I had been talking about this idea for so many years now, I have developed an anecdote about need and wants. It goes this way “If today, you keep on needing what you want; someday, you will be wanting what you need.” Clearly, if we keep on feeding what we want today, by needing it so badly, we will fail to invest and plan for our retirement when we will realize we need a lot of things by then.

6 thoughts on “Intro

  1. Pingback: About the site | Ricky So Good

  2. jj ceniceros

    Good reading! I recently just retired and wished that I won’t have to go back to work again; but reality is, raising 5 kids and sending them all to college is really expensive and I should have planned on college funding 2 decades ago! I do need to save more money for investments and emergency funding. You are right about the “need” and “want”. Discipline is one of the keys to save money. Keep posting; I’ll follow your blog. Thank you Ricky!

    1. Ricky So

      Hi Jay, it is never too late to catch up. Feel fortunate that you can still work (if you want to). Plus, you had a colorful career.
      I didn’t know you have 5 kids! This is an achievement having them and raising them. Just drop me a message should you need my opinion. Have a great day!

  3. Rachel Angeles

    Dear Ricky,
    An officemate mentioned your name while we are discussing the topic on Financial Management. I remembered immediately the name of my classmate at the Divine Word Academy of Dagupan (DWAD) from elementary to high school. I asked for your profile and also googled. And there’s your picture. You look more mature but I can still recognize you.

    I am glad your doing well. Hope you remember me? Your competitor in the honor rolls.

    Be glad to hear you speak someday.

    God bless!!!

    Rachel E. Angeles
    Industrial Relations Division
    Philippine Economic Zone Authority

    1. Ricky So

      Hi Rachel,
      It is really great to hear from you. Sorry to see this just now. I kind of rested for a while while working.
      Kindly join our DWAD Batch 83 page… we just had our 30th reunion. I do hope you get to join the next one.
      Thank you for commenting. I do hope you like my site. 🙂
      Have a great day!

  4. patriz

    Good day.. Sir Ricky I am Patriz ace a financial management student of Adamson university. We are hoping to invite you in our seminar for security analysis. We really need your help, our team needs to find a speaker that can discuss fundamental analysis. It will be on September 13 ( 8 to 12 pm) it will be an honor for us to have you as our main speaker.. Hope you can see my message sir. You can contact me pro in my email address thank you pro sir.


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