Handling financial problems: Using emergency cash from partial savings

Effective ways to overcome financial problems: maintain emergency savings, leverage NPS, PPF, EPF, ULIP partial withdrawals, and consider fixed deposit withdrawal implications.

managing a Financial problem

In times of financial problems, having a well-established savings safety net may give much-needed respite. A solid savings strategy not only helps you overcome unforeseen financial problems. But also provides peace of mind and stability.

When facing a financial problem, it is common to see that many individuals want to borrow money as emergency cash. But when interest rates are excessive, borrowing money from the external market is not worthwhile. Currently, the interest rates in the market are 8.75% p.a. to 49.5% p.a. for personal loans.

Watch: 5 tips to help you save money


  • Evaluate urgency and demands to address financial problems.

  • Maintain 3-6 months' expenses in an accessible account.

  • Use NPS for emergencies, education, disability, and startups.

  • Access PPF, EPF, ULIP partial withdrawals strategically.

  • Prioritise needs; note fixed deposit withdrawal impact on interest.

Tips on how to overcome financial problems diligently

Evaluating the core issue

When faced with a financial dilemma, determining the severity of the issue and identifying the urgent financial demands are the first steps you should take. 

Cash reserves for unexpected expenses

It is advisable to keep three to six months' worth of spending in an account that is simple to access, like a typical savings account.

Also Read: Learn how to save smart!

Various withdrawal sources

National Pension Scheme (NPS)

The National Pension Scheme permits partial withdrawals in some circumstances, such as those involving urgent medical care, the need for higher schooling, disability (more than 75%), or funds for a startup. These withdrawals are subject to a restriction of 25% of the value of the amount contributed in a lifetime.


Public Provident Fund (PPF) has a lock-in period of 15 years, but partial withdrawals are permitted from your own contributed reserves after 7 years. 

The Employees Provident Fund (EPF) expansion provides the flexibility to raise a partial withdrawal under certain circumstances, like medical treatment, the purchase of a new home, or higher education. However, the amount might differ as per the severity of the reason.

Under Unit Linked Insurance Plans (ULIP), three partial withdrawals are permissible, and the sum depends on the insurance provider and the type of policy you have acquired during the entire tenure.

Also Read: All you need to know about investing in PPF

Fixed deposits

In the case of fixed deposits, interest on the portion you are requesting to withdraw will be shelved, but the interest on the remaining portion of the deposit will not change.

Prioritising withdrawals

Prioritise withdrawals by starting with the funds that are the easiest to reach before moving on to assets with a longer time horizon.

The bottom line

To conclude, effective financial management involves thoughtful selection of which savings instruments you should withdraw from, driven by a thorough analysis of your current financial situation.

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