Introduction to Financial Needs Hierarchy
The Payday King Hierarchy of financial needs provides a framework for assessing the economic well-being of any person. Eight years after our mission to create a fair financial center for hard-working families, we at best payday loans california are empowering lending circles to empower participants to build credit, reduce debt, and increase savings.
But how can these gains lead to greater financial security? Do they lead to a significant improvement in the financial situation of our customers? As Lending Circles we have had a prosperous and expanding development over the years. We have collected data that will enable us to better understand the impact of the program on the economic stability and mobility of customers. However, as we began to explore these issues in more depth, we realized that there was a lack of a clear definition of financial security and that we had a reliable way of measuring financial security.
An incomplete picture of financial health:
Typically, income or credit ratings are viewed as proxies for a person's financial well-being. But these common metrics are not enough to gauge a person's financial life. Knowing about a person's income doesn't say much about their expenses, debts, or assets - especially in cases where income is volatile, day-to-day, or week-to-week uncertain.
What does it take for a borrower to repay this loan? Is she need an again loan to pay off the first? If so, then we honestly say that she can repay that original loan?
The payday loans california hierarchy of financial needs:
For answers, the revered American psychologist who developed the "Hierarchy of Needs," a model that describes the physical, social, and psychological requirements that must be met for an individual to achieve their true potential. Using the same logic, payday loans online california developed the “Hierarchy of Financial Needs” (HFN) to explain what individuals need to realize their true economic potential.
The HFN identifies financial parallels to physiological needs (income), security (insurance), love, and belonging (credit), appreciation (savings), and self-actualization (investments):
PROFIT: The most basic financial necessity is income to cover basic living expenses such as food, housing, and utilities.
INSURANCE: To protect income, people need to insure themselves against unforeseen events that cause setbacks. This requires an inventory of assets, including cash, property and health, and protection against loss, theft, damage, and illness.
CREDIT: In order to acquire assets, such as a car, a house, or an education, that would otherwise not be attainable through income, people need credit. This requires that individuals have credit histories and credit scores in order to access and use low-cost capital.
SAVINGS: when people save, they put resources away for specific goals. The ability to save shows discipline and generates self-confidence, a sense of achievement, and respect for oneself and others.
INVESTMENT: According to payday loans ca the peak of the HFN is when people realize the dynamism of their economic potential. This is the phase when people can invest in high risk and high-risk projects. Investing gives people the opportunity to achieve important life goals such as financial security for their families, retirement, and dignity in old age.
The hierarchy of financial needs is a revolutionary but simple model that provides clarity about what people need to do in order to realize their true economic potential. People need an income to pay for expenses and balance their budgets. You also need to insure against shocks; they must use credit to purchase assets; they have to save up for a rainy day, and they need to invest for future returns. Although each individual faces a unique set of circumstances and challenges in meeting these needs, the model is applicable to all income and population groups. More details california payday loans.
