In 1943, Abraham Maslow developed his hierarchy of needs, which identified and ranked the general needs required by all humans. In a similar vein, the Wealthsimple Financial Hierarchy of Needs attempts to identify and rank the general needs required to begin down the path towards smarter investing.

Paying Off Bad Debt, Saving For Retirement, Starting an Emergency Fund
The most important step to starting down the road to good financial health is to begin paying down bad debt, like personal loans, credit cards and other types of high-interest debt.

Have you ever looked at the portion of your credit card statement that tells you how long it would take to pay off your debt if you just made minimum payments? It takes a ridiculous amount of time. These types of debt can quickly become huge burdens if left unchecked, so it is imperative that you begin paying them down as soon as possible and avoid just making the minimum payment.

Along with tackling bad debt, it’s also important to start setting aside a portion of your income for retirement contributions and an emergency fund. Beginning this as soon as possible will ensure that your savings have the longest possible time to grow, helping you maximize the amount of funds you have at your disposal when you need it most.

Insurance, Paying Off Good Debt
The next step to good financial health is to begin paying down your good debt — mortgages, student loans, and generally any other longer-term debt. Although the interests rates on this debt are usually lower, it still has the potential to put a significant dent in your retirement savings if you don’t make an effort to pay it down in a reasonable amount of time. Again, setting aside a portion of your income to automatically pay down this debt in a timeframe that seems reasonable to you is going to be the best strategy to becoming entirely debt free.

Along with paying down your good debt, it is also important to start thinking about funding insurance policies — life, disability, and renter’s. While we don’t like to think of the worst coming to worst, tragedy can befall any of us, causing us to lose assets and miss work. Even with a robust emergency fund, a serious enough calamity can force us to take on thousands in credit-card debt, effectively undoing all of our hard work!

Investing, Estate Planning
Your debt has been paid off, you boast a sizable rainy-day fund, and you are making insurance payments with ease. Now that we’ve gotten our present financial situation under control, it's time to focus on the future. Maybe it's time to open up a non-registered account to save for buying a house? Or saving to put your kids through school by opening an RESP account? Whatever your long-term goals are, now is an excellent time to start saving to make those dreams a reality. Putting money aside for your investments will help make these goals closer than you think.

Lastly, it's probably a good time to start thinking about estate planning and wills. At this point, you’ll probably have some investments, savings, maybe even a house, spouse and children! This means you should probably have an estate plan in place.

Rewarding Yourself
So you’ve met all the other steps to good financial health and now you’re wondering what to do with your remaining disposable income? Well, we think you’ve earned the right to spoil yourself. Maybe take a vacation, or go for dinner at a fancy restaurant? Whatever it is, you’ve earned the right to use a part of your income, tax return, or inheritance, to reward yourself for becoming financially healthy!

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