The Right Order To Build Financial Security

Just like Maslow's hierarchy of needs, your finances have levels too!

In this video, I break down my Hierarchy of Financial Needs, a 7-level framework that shows exactly where to focus your money and in what order. Whether you're just starting out or already investing, this will help you figure out where you are — and what your next move should be.

The 7 Levels:

Psychology of Money — your relationship with money comes first
Emergency Fund — your financial safety net
Insurance — protecting what you've built
Paying Off Debt — clearing the way to build wealth
Savings & Investments — putting your money to work
Retirement Planning — your future self will thank you
Estate Planning — protecting your legacy

You'll learn:
Why you can't skip levels and what happens when you do
How to know which level you're currently on
What to do at each stage
The mistakes most people make by jumping ahead

Start at the bottom. Build to the top.

Take the Money Story Questionnaire here: https://www.womanandfinance.co.za/resources

Estate Planning Video:

https://youtu.be/FJ4181b7fSY?si=BUYYtv2C95CJMWoN

Transcript

SPEAKER_00 0:11

Hi tribe, welcome back to my channel again Mapalo Maku. So most of you know Maslow's hierarchy of needs, and I have come up with my own little hierarchy of financial needs, what should we call it? Mapalo's hierarchy of financial needs. Okay. And really this is just about often when I hear people talking that personal finance is so difficult, there are so many things to learn. I just wanted to put it into perspective and say, if you just did these few things, there's about seven of them. If you just paced yourself, learned each one, maybe every single month you focus on one, you will get to know all these principles of personal finance, and that is what we're discussing today. So, as you will see somewhere here, that the first one that I want you to think about is the psychology of money. Because what I find is when it comes to personal finance, people want to focus on the numbers, they want to jump straight into the numbers. And every time when I do coaching sessions, I start off with who are you? Why do you use money the way you do? Why do you think about money the way you do? What was your upbringing like? And that holds so many answers to why we are doing what we do with money. If you just jump straight into numbers, it doesn't connect. For me, the thing that changes personal finance or behavior around personal finance is when your heart connects with the information that you are being told. So the psychology of money, getting to know yourself, is very important when it comes to managing money. Because our emotions often control us. We know financial principles, but if you cannot connect your heart, mind, who you are, then you are probably just still going to keep on making the same mistakes. Okay? So I even remember this lady who said to me, you know, I know why I am always getting myself into financial problems. It's not because I don't have money, but it's because I have low self-esteem. So sometimes even the purchases that you make, even the decisions you take around money, you really have to interrogate within yourself to say, why do I want that car? It can be a wonderful car, it can be a nice car, and everybody deserves all the things that you desire. But am I buying it so that I buy people's admiration? Am I buying it be and if truly you come back and you say, No, I actually have um the affordability and that's the car I want 100%. But most of us are making decisions out of our own heavy emotions. So I will link, I will put down uh in the description the link to download your own money questionnaire. Actually, you know, I had someone I was doing a coaching session with for one of our uh corporate clients. She was saying that she did the money questionnaire over the weekend and she said she cried during um answering the money questionnaire when she was doing the money questionnaire because it goes deeper than just the numbers of what's happening in your life. So I'd encourage you to go download it, okay? Then the second thing is you need to build an emergency fund three to six months, sometimes even a year who can afford to. But what I always say, people get so overwhelmed. I think I said this even in my last video people get so overwhelmed by just how much that amount is. I've had people who build their emergency funds for six months, uh, six month emergency fund over two years. So don't be afraid to take the first step and say, even if it's my first 5,000 rent that I've put away for emergencies, I will do so. Okay. And again, the question sometimes is: should I just pay off my debt? Then I'll build my emergency fund later. And I always say, if you are paying off the debt and there's an emergency, what are you going to do? You're going to go back to the debt that you're trying to pay off. So building that cushion is very important. Then the third thing is insurance. I have found that in the personal finance space, people talking about uh money, money management, often the focus becomes so much around investments, which is fantastic. But without having some sort of insurance, especially when you are building, as most of us are, if something happens to you, so you break your arm, you break your leg, you you get a trait disease, so like your cancers, strokes, and the likes, and you're not able to work, who's gonna pay your bills? Who's gonna pay the bills? The bills will keep on coming regardless. So you need to protect you, the biggest asset in the equation. You need to protect your ability to earn income, and that is through income protection and having critical illness or tread disease cover. Yes, life cover is important because it will take care of any debts that you might have when you pass away. And if you have children like myself, you want to make sure that they are taken care of. But outside of life insurance paying at death, you really should look into having income protection and tread disease. And unfortunately, because of the lives of the of the lives we live, more and more young people are contacting uh contracting uh cancers and heart diseases and strokes and the likes. So make sure that you do have that insurance in place. Then the fourth one is paying debt, of course. You know, I was I actually did a video earlier on what would your budget look like if you didn't have debt. And now I'm not talking about your house or car, I'm talking about credit card overtraft, personal loan, clothes, store accounts, the likes. Imagine just how much breathing room you could possibly have if you were not overcommitted to all these debts. So try by all means to pay off your debt, and the quickest way to pay off your debt is by paying extra. So do not just pay the minimum that um you're supposed to pay. So let's say the minimum is 3,000 on whatever debt it is you have, make sure that you pay 3.5. If you have lump sums, paid off or put that lump sum in towards that debt so that you are able to pay it off quicker. Because the quickest way also to build your net worth is by paying off debt, because effectively by paying off debt, you are decreasing your liabilities, and that money now you can start using it for savings, for investments, for the things that really bring you joy. Then five savings and investments. So, savings again, remember sometimes I know we use it interchangeably, but there are two different things. Savings are I'm sending my kids to school next year, I want to make sure that I pay um in advance, or we're going on holiday, I want to start saving for that. That is for short-term um goals that you have. Investments are for long-term, anything beyond seven years, okay? And I have spoken so much about tax resin's accounts and other different um uh investment options here. But the whole point is you want to make sure that you have investments so that number one, you protect yourself against inflation and keep your purchasing power of your money, but also you want to either receive dividends or make sure that that um capital there is growth on that capital. Okay, so investments are very, very, very important. Then the sixth one is retirement planning. And you know, so many people demonize and say, Oh, retirement annuities are terrible, guys. There is no product that's terrible, it is how it is structured. Number one, what fees you're paying and knowing why you are getting that. As a self-employed person, I don't have a pension fund, and one of the best ways, not only because I'm saving for retirement, but for tax purposes as well, is planning is having a retirement annuity. If you are employed, please go and check your statements, go and check your benefit statement, go and check if you have what we call group risk benefits. Okay, and the group risk benefit speaks very nicely to what we spoke about earlier and around insurance because in there you will probably have life cover, income protection, and trade disease. And something that I just want to say if you as an individual go to an insurance company and you have an insurance policy and you have taken out income protector and you go and check with your employer and you look at your pension fund, you look at your group risk benefits, and you have income protection, you're wasting your money on on your own this side. Okay, because if there is an incident where you can't work and you claim in your uh you claim from your income protection uh policy, you will not get paid twice. So it's those small things that make a big, big difference. So retirement planning. Do you want to depend on your children when you're old? I certainly do not. So retirement planning is very important. And if you find yourself, let's say you are 25 and you're starting to work, it is the best time. Make sure that you contribute the maximum with your employer, do not withdraw the two-pod kuhelaandi pizza, guys. Just leave that money, it is for your retirement income. And if you're self-employed, or sometimes I do have people who um employed and have a pension or provenant fund, but they still want to contribute more. And in fact, actually, most of the time it's not going to be enough. Your pension fund is not going to be enough. So, also adding uh something that supplements either in the form of a retirement annuity or a tax pre-sings account, very, very important. Then, of course, the last one estate planning. What is estate planning? At one point, we're all going to die. That's just the reality. So, estate planning is making sure that you have a will, making sure that on your policies, on your investments, you leave your beneficiaries and you're updated on a regular basis. It is making sure that you are thinking about, hmm, when I pass away, there is you don't die for free. I did a video, uh, we'll also link it below in the description where we had um some a fiduciary who was explaining to us how to wrap up an estate. You do not die for free in South Africa, there are uh taxes that you pay even when you die. So making sure that executors' fees, you are taking care of them, making sure that there is enough liquidity in your estate. If you want to leave your kids with something, you need to do a thorough estate plan. So these are the seven, seven things. I know it feels like a mouthful, but remember what I said at the beginning of the video. Do not be overwhelmed, don't let analysis paralysis get the best of you. Look at this diacrame and say, okay, in this month of June, I'm going to start with, you know, knowing myself, knowing why I do the things I do. Then building an emergency fund. Okay, let me get codes on insurance or let me review my insurance policy. Um, okay, how do I go about paying off debt? What can I let go of, or how can I increase my income? Um, now thinking about savings and investments, retirement planning, and lastly, estate planning. I hope you have found this video useful. Remember to subscribe as always. Like the video, share it with someone who is yearning for this knowledge. But also, if you have any questions whatsoever on either one of these principles, leave the question below and I will be happy to answer it. Until next time, bye for now.