You've probably heard of Maslow's hierarchy of needs.

It's the ranking of primary human needs for psychological well-being as

described by American psychologist Abraham Harold Maslow, and is usually
illustrated not unlike the old-school food pyramid:

The financial blogger known only as Mister Squirrel (who has since closed his
site) shared his own version of Maslow's hierarchy: the path to financial
success.

Here's what it looks like:

FIRE Hierarchy of Needs (after Maslow)_editedMister Squirrel

Squirrel, who "dreams of a non-corporate life," calls his theory the Hierarchy
of FIRE (Financially Independent and Retired Early). The idea is that once
you're operating in the highest tier with your money, you're set up to be a
financial success — and that applies whether or not you're aiming for early
retirement.

Here's how the tiers break down, from most essential to least:

1. Surviving. Before anything else, we have to get our minds right when it
comes to money. As Squirrel puts it, "If you think that the government will
look after you, money will take care of itself, or you’ll win the lottery, then
you’re not thinking about money correctly." In this stage, you'll also start
living below your means, and spending less than your monthly income.

2. De-debting. While everyone's debt situation is different, ridding yourself of

"bad debt," (the kind that costs you money without giving you any clear

ART
value in return, like credit card debt) needs to be checked off your list before
you can make real progress.

3. Learning. This is where you set aside an emergency fund to keep you in the
green should something go wrong, and where you start learning about the
possibilities for your money. Which accounts should you use? Should you
invest, and how? If you have a question, now is the time to find an answer.
Luckily, you have the entire internet at your fingertips.

4. Investing. Time to make use of those answers. Squirrel points out that this
stage doesn't have hard borders — it will continue on through the pyramid's
last stages.

5. Optimizing. Now that you have your answers and have gotten your money
in order, it's time to start tweaking your plan to perfection: Plan for taxes,
get a will, create a system to check on your money.

6. Freeing. "When you get to this stage," Squirrel writes, "you should be
'there.'" Now that you're financially independent and perhaps have even
retired early, you have predictable expenses easily covered by passive
income streams.

The theory isn't perfect, and Squirrel is the first to say that you should do
your research before making any financial decisions, but it is a helpful
template for thinking about your path to financial success.

ART