We’ve been looking at our personal financial goals through the lens of a strategic business acronym called SWOT, which stands for:

Strengths ^[2]
Weaknesses ^[3]
Opportunities ^[4]
Threats.

Today, we will look at threats.

What are the external threats to your finances?

^[5]Threats can take many forms. They can be large scale (major economic threats) or minor (that department head that just doesn’t like you). Whatever they are, your job in conducting a SWOT analysis is to reduce the dangers these threats represent. Since the health of our personal financial world is dependent on increasing income and decreasing expenses, it makes sense to look at those two areas for threats.

Income
What do you do for income? If you work for a salary, do you have that salary insured through disability insurance? Did you know that in any given year, you’re much more likely to get disabled than die? Remember that as a general rule, paying your premiums with pre-tax dollars means that any benefits you receive are taxable. That’s why I pay all my premiums with after-tax money.

Maybe you live off of interest. How diversified are your investments? Have you read the insurance that your investment adviser maintains? Is he or she a member of FINRA ^[6]? Is he or she certified? Have you checked or did you just take it for granted because there was a certificate on the wall in a very expensive looking frame?

Related to income, how’s your life insurance ^[7]? I believe that every person needs at least some life insurance. You may not have anyone dependent on your income, but who will pay your funeral expenses? Parents? Friends ^[8]? Do you really want someone else to foot your final bills?

How about threats to your job? Is it secure? Are you sure? Are there any advantages you can give yourself such as additional certifications, finishing your degree, or training? Have you asked?

Expenses
Do you feel like your expenses are out of control? In what areas can you work to reduce those expenses? Here’s just a few indicators:

• A car payment that’s crushing your checking account ^[9]
• A mortgage ^[10] that’s about to adjust and you don’t think you can afford it
• Dining out far too often (hint: use Restaurant.com ^[11] instead)
• Not putting anything (or minor amounts) in your savings account ^[12]
• Putting large amounts in your savings account ^[12], but taking them right back out again for living expenses
• Escalating utility payments
• Paying for things you rarely use (gym memberships, premium cable, phone land line)
• High insurance premiums
• No retirement plans in place or making minuscule contributions
• High interest credit card ^[13] debt
• Using a pay day lender

The most important “take away” is to do something to reduce the risk that these threats represent. What steps can you take?
1. Visit with a competent professional and get the proper amount of insurance for your budget.
2. Meet with the human resources department or your boss to get an idea about how to provide more value to your company.
3. Ruthlessly slash your expenses, eliminating those items that are eating you alive!

[tags]strengths, weaknesses, opportunities, threats, money, personal finance, personal productivity, goals, business, SWOT, discipline[/tags]

photo ^[14] credit: hunterseakerhk ^[5]

About the author

Ron has written 1080 articles on The Wisdom Journal.

The founder and editor of The Wisdom Journal ^[15] in 2007, Ron has worked in banking, distribution, retail, and upper management for companies ranging in size from small startups to multi-billion dollar corporations. He graduated Suma Cum Laude from a top MBA program and currently is a partner in a national building materials company.

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