Thinking about how you'll pay for an emergency after it happens means it's way, way too late.

Quick – what would happen to the state of your finances if a $1,000 emergency happened right now?

What would you do? Do you have the money saved? Would you put it on your credit card without thinking twice? Would you turn to friends and family for help?

Unfortunately, how you pay for emergencies isn’t something a lot of millennials think about until it’s too late. We’re so busy trying to live in the moment, we don’t think far enough into the future to anticipate these expenses. But emergencies happen when you least expect them; it’s Murphy’s Law in action.

If you’ve scoffed at the idea of keeping an emergency fund, you need to think about how you’ll pay for an emergency when one arises, preferably before it has a chance to ruin your finances.

Credit card debt is a vicious cycle

When you don’t have enough saved to cover an emergency, chances are you’ll turn to your credit card as a solution. According to a Bankrate survey conducted in 2015, 12 percent of millennials would use their credit card to pay for an emergency.

Credit cards are one of the easier solutions out there. If you don’t have the cash, and payday is still a week away, how else are you going to get the money? The credit card in your wallet seems like the perfect solution (as long as it’s not maxed out).

It’s not as simple as it seems. Credit cards are a form of high interest debt – you pay for the convenience of using it. Since credit cards are also revolving debt, there’s no “payment plan,” which makes it all too easy to stay in debt.

Plus, what if another emergency comes up a few months later? If you’re depending on credit and not saving, then you’re just going to keep adding to your balance. Even if you turn to personal loans, you’re still accumulating debt. It’s a vicious cycle that’s hard to get out of, which is why it’s best to stop it before it begins.

You shouldn’t rely on the Bank of Mom and Dad

Maybe you don’t think you need to focus on building your savings in case of an emergency because your parents have you covered.

Are you seriously content on being dependent on them for everything for the rest of your life? What if something happens to their finances and they’re unable to provide for you in a year or two?

The point is, anything can happen to anyone. There are no guarantees when it comes to money, which is why it’s best to take control of what you can: your financial situation. You can’t rely on the generosity of family and friends forever.

Even if you did, monetary transactions tend to cause rifts in relationships. Think about how many times you’ve watched “The People’s Court” (come on, we’ve all seen at least one episode). Parties are often suing over small amounts of money that went unpaid. It’s better to save your money so you can keep your relationships intact.

The worst case scenario

Let’s take a look at how this could play out in real life. Say you have $500 saved, and you already have $2,000 of credit card debt. Then your car breaks down. It’s a $1,500 repair, so you drain your savings and put $1,000 on your credit card, bringing your total debt to $3,000.

Then you get laid off.

You can no longer afford any of your bills. Forget rent, you’re behind on paying your utilities, and soon enough, you can’t make the minimum payment on your credit cards. Your credit score is also at risk with all the past due payments racking up. Suddenly, the idea of having money saved seems pretty attractive, doesn’t it?

The best way to pay for emergencies

In a perfect world, everyone would have the ability to save at least $500 to protect themselves from the financial burden of an emergency. You should never save money out of fear, but it clearly pays to be prepared with a plan. That’s where an emergency fund comes in.

The peace of mind you get from having savings in rough times is priceless to some people.

The peace of mind you get from having savings in rough times is priceless to some people. If financial nightmares are keeping you up at night, create a plan to reduce your spending or earn more so you can set aside a certain amount per month to save.

Everyone starts somewhere. Each day you delay is a day disaster can strike, but each day you save gets you one step closer to financial security.

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Posted 03.12.2016 - 03:33 pm EST