Rohit Garg, co-founder and CEO of SmartCoin, tells News18 that not having an emergency fund backed up can create problems. Therefore, in such a situation, the option of short term loan can also be chosen. Well, getting into debt is not always a bad thing. Sometimes, especially in times of crisis and emergency, you cannot escape it. All you have to keep in mind is that the debt is managed well. Managed loans can have a positive impact on your finances. Loans taken from NBFCs regulated by RBI are easy on EMI and usually allow longer repayment tenure. This will not only help you focus on your financial goals but also will not let you compromise on your long-term savings. Garg says that according to a report by Transunion Cibil, retail loans in India have almost doubled in 2020 as compared to 2017. Digital loans have further intensified the demand. So now it is necessary that people manage their debt.
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Take an emergency loan if you have a job and regular income
CA Harigopal Patidar believes that a person with a job and regular income can go for short-term loans. But keep in mind that misuse of readily available credit can have a huge impact on one’s financial goals. Understand that in critical times, foreign holidays may not matter much, but retirement and children’s education do matter. Hence, you must make sure to continue your investments in long term goals. What to do if you are facing trouble in your field or your income is irregular? Experts believe that in such a situation, investment can be stopped for some time.
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Take care of insurance and emergency fund
Think of it in such a way that hospitalization in a big hospital can cost between Rs 2 lakh to Rs 10 lakh. If you do not have a health insurance policy, then again, your savings can easily get exhausted and you can fall into the debt trap. Hence, your insurance should be taken keeping in view your household expenses as well as inflation. Simultaneously, savings from debt and liabilities should be equal to investment. Your life insurance cover should be able to provide for your family as long as there is no other breadwinner in the family. Similarly, your health insurance depends on many factors like your standard of living and the medical charges of the hospitals you visit.
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Pandemic told that emergency fund must be created
If no one has created an emergency fund, the times of this pandemic have made it all the more urgent. This should be at least six months of your monthly income. Not only this, adequate insurance cover is as important as saving in the bank.