If you want to stabilize your financial goals, you need to complete FNA (Financial need analysis). Here is a guide for you If you don’t know about financial need analysis.
What is financial need analysis?
Financial need analysis means analyzing your current financial condition, your future financial goals and needs, and what steps you should take to accomplish these goals. FNA provides you complete details about your current and upcoming finances.
It ensures that you have sold those financial products that you can afford and that are not too risky and that will help you to achieve your goals and ambitions like saving enough money for retirement.
Why is there a need for FNA?
It is said that a good financial plan starts with a financial needs analysis. It is a requirement to manage your finances. Here are some reasons why you need financial needs analysis.
- It gives you a current view of your financial status to get a crystal clear picture of your finances.
- It highlights any shortfall or instability in your financial products. For example, it highlights if you have too little life insurance policy.
When you complete your FNA, you can build your own unique and affordable financial plan.
What are the requirements to complete an FNA?
You will need to complete the following things to complete an FNA.
- Your total income, total budget, or expenses
- Your liabilities and assets—the assets will include property if you have any, and liabilities will include loans and debts.
- A list of all the financial products you own, such as life insurance policy, disability insurance policy, funeral insurance, investments, medical and health insurance.
- Personal bio-data like your marital status, your children’s details, if you have any, and other dependents.
- The details of employment benefits you are getting as part of your salary package include medical aid benefits, and group life insurance.
- Personal financial goals that you desire to accomplish or a particular date you want to retire etc.
When you put all this information on the FNA, and FNA is completed, you will get recommendations on how you can accomplish your financial goals. For example, the FNA can recommend the following things.
- How much you should save for retirement so that you don’t need to change your lifestyle when you get retirement.
- How much you should invest or save as emergency funds for unexpected events in life.
- How much you should save for other things like home renovation, children’s education, or annual holidays.
- How much you should invest in a life insurance policy and funeral policies.
- How much you should insure your income in case of short-term or long-term disability with a disability insurance policy and income protection.
- How you can protect yourself and your family against deadly diseases like cancer, heart strokes, and other diseases with dread disease cover.
It requires a lot of work to complete FNA, but it is useful and helpful. It tells you what you should do and what you should avoid securing yourself and your family financially.