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Building A Strong Financial Pyramid


If you think about it, building a strong financial future is a lot like a pyramid. In order to reach your goals—whether it’s buying a home or saving for retirement—you’ll first need to invest the time and effort in creating a stable foundation. Doing so will allow you to climb to the next level in your journey and with time, achieve the top aspiration: financial wellness.

Intrigued? Let’s break down the analogy further.

Understanding your financial pyramid

The hierarchy of financial needs is based on a motivational theory model that psychologist Abraham Harold Maslow created in 1943. Maslow’s hierarchy of needs has five tiers that explain human needs and the behaviour used to fulfill those needs:

1. Physiological: food, water, rest

2. Security and safety: health, wellness, strength

3. Social: sense of family, friendship, romance, community

4. Esteem: feelings of accomplishment and value, respect from others 

5. Self-actualization: achieving one’s full potential, personal growth

Each level of Maslow’s hierarchy requires certain levels of satisfaction before a person can move to pursuing the next, higher level of the pyramid. This is also true when it comes to building a financial pyramid. 

Where are you on the journey of building your financial pyramid?

1. Managing your money

When building your pyramid, the base is all about financial protection. This means taking care of your daily expenses, housing and transportation, with a focus on survival through stable cash flow and debt management (such as paying off credit card debt). Once you’ve built a secure foundation you can begin moving through all the other levels of the pyramid. 

2. Protecting your money

The next step is to build upon your financial protection. Most Canadians live in this level of the pyramid. A 2019 IPSOS Reid study revealed that nearly half of Canadians only have about $500 left after paying bills and debts at the end of each month. You can create a financial safety net by putting any extra dollars into savings and an emergency fund, and buying insurance in case the unexpected happens. 

3. Accumulating wealth

Once you’ve mastered day-to-day money management and safety and sustainability, you can shift your focus to accumulating and growing your wealth. You can work with a financial advisor to build your investment portfolio, save for retirement, minimize taxes and pay down debt such as mortgages. Overall, this level is all about planning for your future to accelerate your move to the next level of the pyramid. 

4. Preserving wealth

This is where financial independence begins. You’re managing your daily expenses and regularly contributing to emergency funds and savings accounts such as your Registered Retirement Savings Plan (RRSP) and Tax-Free Savings Account (TFSA). Savings at this level relate to your children’s education, long-term care (should you need it) and maybe even that brand new car you’ve always wanted. Your investments and long-term savings accounts are growing, you’ve got a solid retirement plan in place and you’re confident that your wealth will be preserved for years to come. 

5. Leaving a legacy

Once you have accumulated your wealth and are confident in your ability to preserve it for your future, you have reached the top of the pyramid! You can enjoy your financial freedom and consider estate planning, taking care of loved ones and leaving a philanthropic legacy.

Where are you on the financial pyramid? 

Just like a pyramid, the first step in your financial wellness journey is to establish a strong foundation. This, of course, takes time and dedication—but the rewards are significant.

Whether you want to gain financial independence or leave a lasting legacy, the key to getting there is to work your way up the pyramid by successfully building each tier. It’s important to remember that while everyone is on the same journey, we’re all at different stages—so don’t feel discouraged if you’re not where you want to be yet.

Contact our Member Advice Centre to speak to an advisor to help strengthen your financial pyramid.


Mutual funds, other securities and securities related financial planning services are offered through Qtrade Advisor, a division of Credential Qtrade Securities Inc. Mutual funds and related financial planning services are offered through Qtrade Asset Management (a tradename of Credential Asset Management Inc).Financial planning services are available only from advisors who hold financial planning accreditation from applicable regulatory authorities.