You're in a pinch, need some extra cash, and you need it quickly. With careful planning and resourcefulness, you can find the funds you need—without hurting your long-term financial situation.
First things first, start by looking at your savings. “The biggest thing that I talk to my clients about is the importance of emergency savings to cover those cash crunches when things happen,” says Sophia Bera, CFP® and founder of Gen Y Planning, a financial planning firm based in Minneapolis, Minn., geared toward people in their 20s and 30s.
However, if your reserves aren't built up yet, there are other ways to find cash quickly.
1. Trim the fat from your spending
Start by cutting back on discretionary spending, such as eating out or shopping for clothes. Next, examine your spending carefully and figure out the less-obvious places where you can cut back. For example, consider limiting bulk purchases at wholesale and big-box retailers. Although buying in bulk can save you money in the long run, in the short-term it’s more expensive.
2. Pad your paycheck or pick up extra work
Bera suggests contacting your employer’s human resources department to explore changing the withholding amount for taxes. For example, if you normally receive a big tax refund in the spring, consider adjusting your withholding so that you see more money in each paycheck, rather than waiting for the lump sum.
You can also boost your income through a side gig. Perhaps you’ve gained valuable skills at your full-time job. Leveraging those skills could earn you a consulting or contractor role.
Beyond a side job, think about ways you could generate passive forms of income. For example, taking on a roommate by renting out a room in your home.
3. Ask friends or family for a loan
If you're still a bit short, asking friends and family for a loan is another option— just make sure all parties are on the same page. A written and signed contractual agreement can ensure that everyone has similar expectations. And being open and realistic about your ability to pay back a loan—versus accepting it as a gift—can prevent hurt feelings or strained relationships.
If you go this route, transferring money between individual accounts can be easy with online services such as Zelle® or Western Union® Money Services. Taking out a low-interest loan may also be an option for boosting your cash reserves.
Once your finances have gotten back to normal, review your spending patterns and see if you would benefit from making changes to your financial routines. “I think it has a lot more to do with habits than people realize,” Bera says. Making an effort to boost your emergency savings can help with future cash crunches.