After creating our financial statements, we analysed them using ratios which helped us determine if we are meeting the ideal benchmark or there is need to improve on any area. This ratio analysis can be a guide to determine our financial  Strengths, Weaknesses, Opportunities and Threats (SWOT).

Financial SWOT analysis helps us identify our financial strengths and weaknesses, identify opportunities yet to be maximised and recognize possible threats to our finances.

Strengths represent what you are good at financially. Financial analysis can be a guide.
Weaknesses represent what you are not good at financially.
Opportunities are actions that you have not taken or maximized yet. They can also mean favourable financial situations you can create by utilizing your strengths.
Threats are potential negative events that might occur if your weaknesses are not well managed. They can also mean potential negative events form the external environment that can affect your finances.

An individual after analysing his financial position can have a conclusion like this:

Strengths
Weaknesses
Opportunities
Threats
Not an impulsive buyer. Ability to create a budget and stick to it.
Action: Ensure a budget surplus by increasing income and minimizing avoidable expenses.
Has no emergency fund to cushion the blows a financial dilemma can bring.
Action: Set aside 10% of income for the next five months to build emergency fund.
Invest the surplus from income in profitable investment opportunities.
Action: Search for investment opportunities that can accommodate amount of capital.
A financial dilemma can have a major effect on finances as there are no financial shock absorbers.
Action: Ensure that an emergency fund is put in place and other insurance measures.
SWOT analysis opens up actionables. You do not just analyse but you take appropriate actions.

Finally,
  • Utilize your strengths to take advantage of opportunities.
  • Utilize your strengths to minimize threats.
  • Improve your weaknesses by taking advantage of opportunities.
  • Work to eliminate weaknesses to avoid threats.

We believe in you!

To your financial independence and freedom

Analysing Your Financial SWOT

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