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Yeah I get your point JayJuanGee, and I agree we might just be talking about how we are each choosing to describe things. . But the angle I was coming from when I said savings should be separated from emergency funds is based more on the purpose and intention behind them.
You mentioned emergency funds, reserves, and float, and I think that is a solid one. But in my view, savings as I was referring to it is not just a backup or reserve, it is more like a targeted preparation for specific thing or goals outside of Bitcoin..
You are describing your view of what savings is as the same as reserves, or at least one of the possible functions of reserves. Reserves can be used as emergency funds or they can be used for any consumption good or for a future investment or even to have available to buy the dip. You can hold them how you like and change their purpose.
Emergency funds, on the other hand, are the last resource before running out of funds and the only thing after running out of Emergency funds is to tap into your bitcoin. Sure emergency funds can be used for anything too, yet it seems to me that if someone is down to ONLY having emergency funds, he should start to realize that he is getting into a pretty vulnerable place in which his bitcoin could end up getting tapped into.
For example, someone might be saving to scale their business, buy a piece of property, or even make a major life move. That money has a clear intention behind it, and it is usually not money you want to dip into just because something unexpected happens. That is what the emergency fund is there for.
Fair enough.. there could be times in which you might choose to tap into your emergency funds because you have funds that are being saved for a specific purpose that might even have a deadline or something that will get you into a worse situation if you don't use the saved funds for their designated purpose at or around the designated time. There surely are going to be cases in which we might move our priorities around, and surely there are some folks who don't even need emergency funds because they know that mommy or daddy will bail them out. .so mommy/daddy is their emergency funds... yet the mere fact that they have an alternative source of emergency funds does not get them out of the situation or even the fact that they might purposefully choose to hold less amounts of cash or emergency funds because they know that they have a resource serving as their emergency funds.. could even be their boss or their best friend or their uncle Marvin.
Maybe some folks here already have a strong financial structure or consistent income that allows them to invest freely and not worry too much about these breakdowns.
These breakdowns are way more important when we are living them and/or practicing them. There are some guys who contribute to some of these threads who seem to be talking in theory and not actually practicing what they are writing about. So surely when guys have experiences, they can really start to engage with the theories and even tweak their practices from time to time based on their discussions in threads like this one. Another thing they can use some of the categories differently, but then maybe they come to realize that what they had been doing does not really fit within the category that they thought that it did.
Some times we might put our system in practice, and then we might realize that every month or maybe every couple of months, we are getting stressed out because some portion of our reserve funds is falling down to below $1k, and we had noticed that as long as it stays above $1,500, we don't really feel stress, but if it starts to go below $1,500 we get a bit nervous, but if it goes below $1k then we start to get really nervous. .. so then after we experience this for several months in a row, we decide that we are going to have to up our numbers by somewhere between $300 and $500 in order to start to feel more comfortable. At first we decide to put it at $300 more for the next month or two and then if that resolves the issue, then we can leave it at that position for the future, but if we are still feeling more stress than we want to feel, then we are already prepared to increase it by $200 more to put it at $500 more from the original amount. So in some sense, we have a combination of finances and emotions that are helping us to figure out our comfort level and balance.
But for others still trying to establish themselves or build towards stability, I think it is important to treat these intentionally. Like, someone can be DCAing into Bitcoin, have an emergency fund, and still be setting aside savings specifically for launching a business or going back to school or something else important. I think separating them mentally helps a person stay organized and avoid being forced to make poor decisions under pressure.
I think that you are correct in terms of describing the situation like that, and if a person has a goal to build his emergency funds up to 3 months, he might also have side projects that are going on that he needs to fund, like you said. It might not matter so much what we call these various funds, yet he might also end up getting himself into trouble if after a year or more of buying bitcoin, he has build his bitcoin investment up to 3-4 months of his expenses, and his emergency fund is still only 1 month, but he has various savings that he ends up spending for their designated purposes, so then that savings cannot serve as an emergency fund either.. Let's face it if push comes to shove, and you spend all of your emergency funds, then your savings might be the ONLY thing that is left and stopping you from spending your bitcoin, so it is up to you to figure out your priorities and to decide are you spending your bitcoin or are you spending from the savings that was meant to buy the birthday bicycle gift for your daughter. you have to figure it out, and part of the problem or dilemma you got yourself into is to run out of funds in the other categories. You can decide which ever way that you like, yet part of the reason that we discuss some of these matters is so that guys can hopefully figure out ways to better establish systems and practices to help themselves and to lessen the chances that they are going to put themselves in a dilemma that they would not want to be in.. yet when they get to that spot, they are the ONLY one who can decide from which funds are they going to spend first.. .
So yeah, I am not saying savings can not overlap with reserves or investment depending on how they are used, but I still think there is value in viewing them differently from emergency funds, especially when they’re tied to a clearly defined goal or timeframe.
Hope this makes better sense…
What you are saying makes more sense, and none of those ideas are strange, even though surely there could be some situations in which you might have some specific item that you are saving for and you will end up getting that item rather than maintaining your emergency funds and sometimes even part of your bitcoin might end up coming into jeopardy... yet in the end, each of us still has to figure out how much various back up funds we have on hand and what purposes and priorities they might have, and surely if we do not have enough and nothing is left, then we may well end up spending some or all of our bitcoin at a time that is not completely of our own choosing, which was supposed to be what we were trying to avoid by making sure that we have enough back up funds in their various categories to cover our various current needs and to prepare for various changes that might unexpectedly come to our income and/or our expenses..