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Quote from: Justbillywitt on May 07, 2024, 06:33:22 PM

No matter the size of your income, you can make provisions for, emergency funds, reserve and float. All you have to do is just assign a certain percentage to all of the funds you are to keep aside, you can say emergency funds will get 5% of your monthly income, 10% will go to reserve funds, 20% investment and so on. If you can be able to put everything in percentage it will be a bit easier for you. Immediately your salary comes in you will know before hand how much you are putting in each funds account. You can't say your salary is too small and neglect to make provisions for any of the funds which you are expected to set aside, if you do it your investment will be tempared with on the long run. No matter the range of your salary, please always make provisions for emergency funds, reserve and float. It will save you lots of troubles in the future.

This is exactly how I do it, I have a % allocation of my disposable income that gets split up into the different places. The one thing to note, and most people don't do this but its a good practice to do is when your emergency fund is fully funded you should continue to add % based on the inflation rate in your country. This is ensure the buying power stays relative to your market. 3 months is good place to start as coverage for your emergency fund, and then you got options to go to 6,12,15,18 months etc. I personally capped it out at 18 months, but have been doing this a long time, 3-6months can usually deal with most things to be honest.

% based division of disposable income is nice too, because when you get a salary increase or even like "bonus" or "unexpected windfall" you can apply the same % divisions to spread it out into your different places.

Keep stacking

Investment success must be based on a proper planning and an additional amount of money to meet basic household expenses against disposable income. If you have a lot of income you can increase the amount of investment, but the amount of emergency fund coverage for a long period of 18 months but I think you are wasting. You could have kept coverage for at least 6 months and should have decided to invest the remaining amount. In this, you could get the investment profit of your extra money. Even during bearish periods more BTC should be invested. To be honest many are more conservative in decision making which may not be correct.
It may be a good decision to withdraw yourself from waste when you know you have to continue through the holding.

18 months is long enough preparation if he mean about that emergency funds and we might just waste some money there for hiding a lot of money intended for emergency funds since for sure in span of 6 months we can find another opportunity that can generate us another source of income.

For people still got confuse about what is emergency funds and how should use it then maybe this article could able to give them an idea about its real use https://www.wellsfargo.com/financial-education/basic-finances/manage-money/cashflow-savings/emergencies/ They should not get confuse about their reserve funds since this is truly different since this can be a disposable amount which they can use for additional investment or other things they need in life. 3 to 6 months emergency funds reserve is enough and for sure we can secure our selves with that time span.

Let me add some context around the 18 months and the why. Say you have an emergency and you have to dip in and use say 6months, well if you only had 6 months in there you now need to go replace this which means diverting % from your other places you divide your money up to. It happened and I missed out on a few opportunities because I had to reallocate into the emergency fund to replenish it. After that I went to 12 months emergency fund. Another time I was laid off 3 times in one year, plus a whole bunch of things happened which caused me to use up the 12month fund. Definitely an outlier in general “emergency” type situations but it caused a lot of hardship and headaches. After re-establishing 12 month fund and having a few nightmares about something like that happening again I upped to 15 months and bit later on through a windfall it’s at 18months. It’s nearly all liquid, a small portion of it is invested in a Roth, which I can withdraw from easily if needed without any penalties or tax etc(most ppl don’t do this but you can)

Most general emergencies can be be handled by 3-6months, but by god that one year was a bad one. Luckily I had 12months of cash but it nearly broke me.