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F.A.R.E. Debt Education

F.A.R.E.’s mission is to provide exceptional debt education, to ensure financial independence, foster financial responsibility and to improve the quality of life for the betterment of society

Maslow’s Hierarchy of Needs

Abraham Maslow, a humanistic psychologist, is known for establishing what is referred to as a hierarchy of needs. Maslow believed that human beings are fundamentally good and are motivated by unsatisfied needs. For example, if you were homeless and someone offered you a choice between extended shelter or a designer watch, the lacking of the basic need of safety and security would overshadow the value of the watch. Without thinking one would undoubtedly choose shelter. Thus, instinctively the simple needs are satisfied before the complex needs.

According to Maslow, there are five levels of need from basic to complex: physiological, security and safety, love and belonging, self-esteem, and self-actualization. He arrived at this conclusion by studying intellectuals such as Albert Einstein, Jane Addams, Eleanor Roosevelt, and Frederick Douglas, unlike his predecessors. We will study the story of *Tina, who is like many, a financially challenged consumer.

In terms of credit, we want to look at how needs and deprivation of needs contribute to debt and its accumulation. We?ll start the journey at the most basic level of human necessity.


Physiological needs are biological, things the body needs to survive that cause us to involuntarily seek them out in response to short supply such as air, water, food, and sleep. Lack of sleep, for example, may cause an otherwise responsible adult to fall asleep at work or a student to fall asleep in class. The need for sleep is truly beyond your control by that point.

Now, how can the physiological needs get us into trouble with creditors? Look at the following scenario.

“*Tina always took pride in being able to take care of herself. So when she lost her job as a result of downsizing in late October, she relied heavily on her credit cards for groceries and household needs. In one month?s time, Tina had amassed a total of $600 in groceries and incidentals. Because she was unable to find employment, Tina was only able to make minimum payments on her card using funds in her savings account.”

The physiological need attempting to be satisfied here is for food. A better choice for Tina to have made would be to have used savings account funds for immediate needs. Most people set aside savings accounts for emergencies but fail to use them when an emergency occurs if credit is available.


Most people think that these two words are synonymous with one another, not so. Security needs have to do with establishing stability and consistency in our surroundings, while safety has to do with preventing harm to oneself or property. We need the security/safety of a home with doors and windows that lock and a car that runs. How can this specific need affect your credit? See what happens next to Tina:

“In addition to paying for groceries, Tina also used her credit cards instead of her savings to pay household bills, including getting a cash advance for her rent. Bills totaled almost $900 in addition to the $600 she had already added. Her credit limit was $2000. In one month she had almost met her limit. Tina was also not aware that cash advances carry higher interest and fees and finance charges accrue immediately. She did not use her savings account because she liked the idea of having those funds in the bank if she needed them for emergencies.”

In this scenario Tina could have used her savings again to pay rent and household bills. Remember a savings account is money that you own?interest free! Why create bills that you have to pay back to someone else.


Everyone wants to be loved, needed or to feel like they belong with a certain group of people. This is the love and belonging need we?re trying to satisfy. This may explain why we join clubs, organizations, and even religious groups. We need to be needed. We need to belong.

“Along came December and Tina was newly employed. Thinking she would make up what she spent, she used credit cards to buy all of her holiday gifts. She spent a total of $500. When she got her paycheck she again made the minimum payment but because of the holiday it posted late. She received a late fee which took her over-limit and caused a fee of $35. Tina quickly sent in a larger payment to bring the account back under limit, but because of the late payment her interest rate was increased from 18% to 23.99%!”

In an attempt to satisfy her love and belonging need Tina went “all-out” for the holidays as she usually did, not wanting to disappoint her family. As a result she later incurred a late fee and an increase to her interest rate. Was it worth it? Consider this — interest rate increases range from 3% to 4% on average when a payment is late. Credit card companies rarely reduce interest rates without a customer calling to request it. Always make payments on time.


There are two levels of esteem needs. First and most familiar is self-esteem. This is what comes from what you know and have mastered in your own mind. The second is the recognition that you get from other people. For example, performers feed off of audience/fan attention, applause, and affection. Wanting admiration has to do with the need for power. People who have satisfied basic needs now look for status, which is why one may go from an economy car to a luxury car. Not that one is better than the other mechanically, but to illustrate their level of success with more expensive possessions.

“Tina was now employed and had gotten through the holidays but still wasn’t feeling back to her old self. She had always had a propensity towards fashion and only wore designer clothes. She hadn’t been able to shop for at least 2 months and was itching to get “a little” something. She whipped out her credit card to purchase a suit at a local boutique. She spent $200 and reasoned it was okay, lamenting silently how she used to spend twice that much in one sitting!”

Tina again used credit cards to satisfy her esteem needs. With a “new job, new clothes”, “half of what I used to do” attitude she walked right into another $200 debt” and at a higher interest rate. Like most people, being bogged down with debt and the worries it creates can keep you from reaching your full potential. Tina isn’t feeling the pinch now but wait until she gets her next bill. A variety of things could happen to make things complicated. What if she doesn’t make it through the ninety-day probation period at her new job” She’s close to her credit limit and now has a higher interest rate.


According to George Norwood’s Maslow’s Hierarchy of Needs, “The need for self-actualization is the desire to become more than what one is, to become everything that one is capable of becoming,” such as purpose, personal growth and realization of potentials. People who have everything can maximize their potential. They can seek knowledge, peace, esthetic experiences, self-fulfillment, and oneness with God, etc. It is usually middle-class to upper-class people who take up environmental causes, join the Peace Corps, go off to a monastery, etc.”

Tina and most people will never reach self-actualization because the lower needs have not been met. Credit problems can be a factor in all of them, leaving personal and financial growth and development in a stagnant state.

We can all identify with at least some of the situations Tina encountered. Whether it’s a new wardrobe for a new job or name brand groceries when generic is just as good, we have all made decisions that may not have been the best for our credit. During the next 5 modules we will explore different areas of credit and how Tina handles her own financial situation.

One of the things we want to assist our clients in doing is recognizing where their needs are not being met in terms of credit, educate them on ways to alleviate debt, and get them motivated to a responsible financial future.

*Fictitious character

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