Psychologist Abraham Maslow's theory of "self-actualization" states simply that all humans tend to move toward being the best that they can be. Our progress on that journey can be measured by the fulfillment of certain needs. Maslow arranged those needs into a hierarchy, believing that we can only strive to satisfy our higher needs after the lower needs have been met.

In much the same manner, our journey to financial freedom can be measured by the fulfillment of certain financial needs. Generally, we take a systematic approach, designing a plan to map each step along the way. But just as in Maslow's hierarchy, the ultimate goal (in this case let's call it financial self-actualization), can be planned for only after we have satisfied other, more basic needs. We call these basic needs the priorities of life.

There are four priorities: health, career, relationships and home. Over the course of the next several editions, I will discuss each priority in detail. For now, I'll confine myself to a brief overview of each, so that you can see their importance in the development of a comprehensive financial plan.

As we go along, I urge you to examine the condition of each priority in your own life. If one or more of the areas needs attention, or in some way is not yet satisfactory, that does not mean that you cannot begin to plan for your financial success. The purpose of examining these priorities is rather like filling out a pre-screening form on your first visit to a doctor. Whatever course of action he or she will eventually prescribe for you must be sensitive to your current condition. Likewise, to be successful, your financial action plan must be mindful of and encompass these basic priorities.

Health. Whether you consider yourself to be in good or poor health, you may be using either as an excuse not to plan. In fact, neither condition changes the need for planning; they merely effect the plan's implementation. The state of your physical health determines the amount of time available to you to accomplish your financial goals. In any case, a longer race requires just as much strategy as a shorter one.

Also within this priority, you should reflect on the state of your mental health. Emotional upset, trauma, grief or distress are examples of circumstances that should cause you to postpone making permanent financial decisions. If any of these conditions are present in your life, work them out first–you are not in a position to decide on the best long-term course of action.

Career. Are you satisfied with your career? What about your spouse; is he or she working, and if so, how satisfying is his or her career? Maybe you want to be in business for yourself. Most of us look to our careers to provide personal satisfaction, as well as to produce an income for our lifetimes. And, since the basis of every financial plan is money (how much do we have? how much do we need?), the status of your career becomes a key ingredient in the formulation of your plan.

Relationships. Happiness has been defined as self-esteem and self-actualization in our work, and love in our lives. If that's true, then once we are satisfied in the priorities of health and career, it remains for us to pursue healthy relationships with others. Further, many of these relationships will have a direct impact on the formulation of your financial plan. Consider your relationships with your parents, spouse, children and business partners.

Home. As you can probably guess, dissatisfaction or upheaval in any of the first three priorities will generally defeat any efforts you might direct toward contentment in this area. Equally, if you have unfulfilled goals regarding your home, such as purchasing your first home, remodeling your current residence or trading up or down for another house, these concerns must be addressed before embarking on any design for other financial goals. For most of us, our homes are the foundations from which we can launch our future financial self-actualization.

In the end, the purpose of designing a financial plan is to arm yourself with a system, a road map if you will, for your journey to financial freedom. As you may recall, when we began our discussion of that journey, we said that it starts with knowing yourself. Examining the four priorities of life will assist you in that knowledge. They aren't quantifiable facts. They tell your financial advisors nothing in a material sense about what you have or what you want. Instead, they tell how you feel, what you think, and ultimately, what may be preventing you from achieving your dreams.

The goal of your investment team is to assist you and to educate you. Webster's New World Dictionary derives "educate" from the Latin word educere: to lead, draw or bring out. Accordingly, the four priorities of life help your financial advisors educate you toward financial freedom.

"…humans tend to move toward being
the best that they can be."

The Priorities of Life – Introduction

Select Additional Articles from Jerry's Corner The Investment Way of Life Four Cornerstones of Success Excuses... More Excuses The Wealth Cycle Investment & the Wealth Cycle An Economics Primer The Life Cycle Creating A Saving Culture Entrepreneurialism A Fortune in Your Hands Look to the Pros - Introduction - Part I - Insurance - Part II - Stock Broker - Part III - Real Estate - Part IV - Attorney - Part V - CPA The Priorities of Life - Introduction - Part I - Health - Part II - Career - Part III - Relationship - Part IV - Home Elements of Investment - Introduction - Part I - Risk - Part II - Management - Part III - Flexibility - Part IV - Liquidity - Part V - Cash Flow - Part VI - Rate of Return - Part VII - Appreciation - Part VIII - Leverage - Part IX - Taxes

Moorman and Company, an accounting and personal financial management firm based in Palo Alto, serves the San Francisco Bay Area, Peninsula, and Silicon Valley from Hillsborough to Saratoga-Los Gatos, including Atherton, Menlo Park, Los Altos, Los Altos Hills, and Cupertino.