BLUF: A Strength, Weakness, Opportunity, and Threat (SWOT) Analysis of yourself enables you to look objectively at your situation, identifying specific opportunities to exploit or threats to mitigate.
Where I Started
I should backup a bit first… to about ten years ago.
I was always interested in personal finance, but other than making a budget I was not aware of many other tools or analysis methods. Then while attending graduate school, a business accounting course opened me up to different ways businesses report and track their finances (i.e., income statements, balance sheets, statement of cash flows).
I determined that if those tools were good enough for multi-billion dollar corporations, they should work for me, just on a much smaller scale. I learned as much as I could about various accounting methods and various metrics.
That is when I started to track my finances with much more fidelity and clarity. I have adjusted the various tools to make them work for my family. For example, my monthly budget combines ‘income statements’ and ‘statement of cash flows.’ My monthly net wealth tracker is basically a modified balance sheet.
Since graduate school, I have continued to look for business tools or more often in my case military tools that I can apply to my personal life. The SWOT analysis method was one of those tools that I came across that I thought might be interesting to apply to my personal life.
Now about SWOT analysis.
SWOT analysis (alternatively SWOT matrix) is an acronym for strengths, weaknesses, opportunities, and threats and is a structured planning method that evaluates those four elements of an organization, project or business venture.
It involves specifying the objective of the business venture or project and identifying the internal and external factors that are favorable and unfavorable to achieve that objective.
- Strengths: characteristics that give you an advantage over others
- Weaknesses: characteristics that place you at a disadvantage to others
- Opportunities: elements in the environment that you could exploit
- Threats: elements in the environment that could cause trouble
Much of the information on SWOT analysis is related to businesses, but I came across it during planning military operations. The SWOT analysis tool is becoming increasingly popular, it is even being used to evaluate national decisions.
Using the tool, I looked at my own life and broke things out. Here are few examples of the output.
Strengths (with plan on how to protect):
- High savings rate
- Do not change lifestyle as net wealth continues to increase.
- Simple lifestyle
- The less we own, the less there is to break, maintain, or get lost whenever we move.
Weaknesses (with plan on how to minimize):
- Not near and rarely see close family
- Speak to weekly, try and visit at least once a year.
- No forever home yet
- Plan to buy another house in the future. Will need to plan on paying a mortgage in future expenses. The benefit is that we are not locked into anything right now and enables us to plan where and what we want in our forever home.
Opportunities (with plan on how to exploit):
- We move often
- Allows us to experience many different places, helping us figure out what we want in the future.
- We can choose to rent or purchases properties every few years. Usually in places with an excellent rental market.
- Military experience and education
- People we meet and experiences gained will likely open doors to potential jobs in the future, if we want to continue working.
Threats (with plan on how to mitigate):
- Health issues
- Exercise often and eat healthy. Go to annual doctor and dentist check ups.
- Missing a bill payment due to various reasons (moving, deployment, work trip)
- Set up automatic payments when able. Track monthly expenses to be able to see if we did not pay a planned bill.
I found the SWOT analysis helpful at looking at my life objectively. Specifically, identifying what I should be exploiting (purchasing rental properties in certain locations) and mitigating (having proper insurance amounts set up).
I highly recommend you doing a SWOT analysis of your own life.