As the saying goes, Hope for the best and prepare for the worst! The question arises as to how to arrange money quickly, wherein an emergency strikes, but you don’t have an emergency fund ready.
You need to define the type of emergency, as in
- The amount you will need (like it could be a sudden medical emergency or a sudden house repair)
- Define the duration of the emergency, whether it is a short-term, one-time emergency, or a long recurring one?
- Assess if the income sources are intact or not?
The first step, when Emergency strikes and you don’t have an Emergency Fund, is to look at
- Your cash in hand
- Savings in your Bank account
Since money lying in the Savings earn lesser interest, hence it is always judicious to use this amount rather than breaking your high interest yielding assets.
Assumption A: Let’s assume, if the Emergency duration is short (usually it will be short-term only), the amount required is small and your source of Income or Job is intact, then it is not advisable to break your long-term investment goals or dig into your long term / high interest yielding instruments.
If the money in your Savings account can serve your need, then you’re sorted, but what if your cash in hand and savings are not sufficient?
1. Take help from Family and friends:
According to your relations, you can prefer to take a loan from your close family and close friends. Usually, friends and family don’t charge any interest, no formal process is involved, and you have the flexibility to pay the borrowed money as per your financial stability. But ensure that the money is paid timely so that the relations are not strained.
2. Ask for Salary Advance from your Employer:
Corporates have the facility of advance salary for their employees. An Advance salary is when your employer gives you an “x” amount of your salary before the next payday. You need to ensure a good working relationship during such requests and ensure that a written and signed agreement has been done.
3. Gold Loan:
A gold loan is a very good option when you are in a dire need urgently. We Indians have always believed in investing in the yellow metal. You can utilize this gold, in the form of bars or even jewelry that has been lying ideal in bank lockers or at home. Banks and NBFC’s both give Gold loans in the range of 75%-90% of the gold value.
4. Instant Cash loans :
Another best option when you are in urgent need of a quick cash loan. Since the Interest rates on Credit Cards can go really high, so one of the best options for a quick payday loan from moneymutual lenders with minimal paperwork & fast dispersal .
Assumption B:
If the Emergency duration is short, the amount required is not high but your source of Income / Job is NOT intact, i.e. you are struggling with your job / consistent cash inflow, then what?
How to arrange money quickly under this situation,
- Recall any loan you have given/collect all your dues.
- Assess your short term assets: You should liquidate your assets related to short-term goals, like RD, Mutual funds, Stocks, and even FD’s (which have been created for shorter goals). Try not to dig into your retirement corpus or assets created for long-term goals.
- Relook at your ULIP’s and other policies, which are redundant in today’s world. You can choose to stop their premiums. But, ensure that you have a TERM policy and health insurance (with detailed coverages). More so, because you don’t have a steady source of income and in the case of Job-loss, your employer will not cover any medical expenses.
- If need be, you can stop SIP’s, RD, and Gold accumulation plan, if any.
- Revisit your expenses and limit your leisure / unnecessary expenses.
These assets should be capable of meeting your short-term need for quick cash and you should be able to arrange money quickly.
