Maslow, our basic needs and saving

By Dian Vujovich

Three incredible challenges the wealthy aren’t faced with on a daily basis center around shouldering the burden of how to pay for our life essentials. Namely, covering the costs of food, shelter and clothing for themselves and their loved ones. Not having to be concerned with those worries amounts to one huge “whew” relief.

It’s been said, and I’ve seen it firsthand, that the stresses from not having enough money is quickly forgotten when incomes and savings amounts go beyond the six-figure level and into the seven-, eight-, nine- and beyond stratosphere. Unfortunately, the reality is most people aren’t six-plusers. That means saving money, any amount of money, can come with challenges.

Remember Abraham Maslow, the 20th century psychologist who was big into wondering what motivated people? What he had to say about motivating people was as spot on 70 yeas ago as it is today.

In 1943, Maslow published a paper “ A Theory of Human Motivation” revealing five levels of needs all human beings encounter. His thinking was that after one level of needs was met, the person could then move on upward and into the next. The bottom and first rung was the most basic level. It included everyone’s need for air, food, drink, shelter, warmth, sex and sleep. When I was in college this level was presented as the basic needs we all have for food, shelter and clothing. Like Maslow, I believed then, and still do today, that without satisfying those first basic needs, a person can’t progress very far within our society.

For each of us, whether we are born with a silver spoon in our mouth or a mouth wide open crying for nourishment, it takes money to meet our food, shelter and clothing needs. Money that is more plentiful for some than it is for others. Money that doesn’t grow on trees and even if it did, once gotten, would require management whether it was the first buck we ever made or the dollar that moves us from $999,999. into millionaire land.

The first step in having money begins with saving some of what comes your way. There’s a line in a currently running Sprint TV commercial that drives home a great point about money. It is: “Like Daddy always says, money doesn’t spend itself.” Oh so true.

Also true is that money doesn’t save itself either.

According to the U.S. Bureau of Economic Analysis, our savings rate in February was greater than it was in January 2015 moving to 5.80 percent from 5.50 percent. That’s not much to celebrate particularly when you consider the personal savings rate reached a high of 14.6 percent in May of 1975. Then again, in 1975, the wage gap between the haves and have-nots was a fraction of what it is today.

Given that interest rates on savings accounts are south of 1 percent these days and many bank charge fees on those accounts annually and/or if x amount of dollars aren’t held in the account, Wall Street’s financial world is doing nothing to encourage people to save.

That’s a little cockeyed especially since interest rates on credit cards is about five to 25 times that on savings accounts, getting a mortgage requires a larger down payment today than it has in decades, and our longer life spans require huge amounts of dollars saved just to cover the very simple basic old-age human needs of food, shelter, clothing and meds.

In Maslow’s day, meds weren’t part of his hierarchy of needs. Then again, people weren’t living for 90 or 100+ years, there were no IRAs or 401Ks around and companies that did offer their employees any kind of retirement incomes required the employee to be tenured and, if so, retirement income came in the form of defined benefit plans.

There are tens of thousands, even hundreds of thousands —and one day maybe even millions —of Americans who will not have enough money saved to pay for their Golden Years unless a money-related financial paradigm shift happens and happens soon.

Until then, the best anyone can do is to make saving money, not spending it, a lifetime priority.