PERSONAL FINANCE SWOT ANALYSIS: PART 5

Financial  Threats

In comparison to other racial groups in South Africa, Black women bear a greater financial responsibility of supporting family and extended family members2. In addition, less than 10% of black women earn more than R10 000 a month, with more than 60% running out of money before the 15th of the month34. This makes black women the most vulnerable racial group, to financial shocks.

Step 3 of the Personal Finance SWOT Analysis series focussed on financial opportunities. The fourth step of your Personal Finance SWOT Analysis is to take time to reflect on, and list your financial threats.

What are Financial Threats?
Financial threats are challenges that you may encounter in your external environment that can potentially decrease your income, increase your expenses, or prevent you from achieving your financial goals. Financial threats are difficult to manage because they are outside of your control.

However, if you are able to apply your mind to possible scenarios that may cause financial shock, then you can work towards creating a safety net for income and wealth protection. So think about your current financial situation and ask yourself:

• How will a sharp increase in the cost of living impact my finances?
• How will an economic recession/slowdown impact my finances?
• Are there any major expenses that could prevent me from achieving my financial goals?
• Could the current political climate have a negative impact on my job security or business or any other income streams?
• How will a major health challenge impact my finances?
• What impact does the  COVID-19 pandemic have on my finances?

Financial Threats – Examples

(1) Disability:is one of the biggest risks before the age of 40. Being disabled to the point of not being able to work, is an accelerated route to poverty.

(2) Job loss:648 000 formal jobs were lost during the COVID 19 lockdown in 2020 (Stats SA)⁵

(3) Crime:In the first quarter of 2021, burglaries at residential properties increased by 6,3% and car theft increased by almost 70% (South African Police Service)⁶.

(4) Default on Child maintenance payments:increases financial pressure to provide for healthcare, clothing, housing, education, and other costs related to the welfare of the child(ren).

Take time to research any potential threats that come to mind. Be careful not to go down a rabbit hole of negativity, similar to a SWOT Analysis in business, you are planning for the future, not calling bad things to happen to yourself. Once you have completely identified your financial threats take a deep breath, kudos to you, there is just one more step left.

The final step of the process focuses on plotting the way forward, covered in the next post – Personal Finance SWOT Analysis : Part 6.