So even if a person cannot afford to invest, I think it is necessary to form an emergency fund even if his basic needs expenses are reduced to a minimum.
What is the need of having an emergency fund when you are not ready for Bitcoin investment? It will be better you use it as your discretionary income and start accumulating Bitcoin gradually with it, emergency fund can be provided later instead of having it and you are not accumulating Bitcoin due to lack of discretionary income it will be important you use it in the place of your discretionary and start accumulating Bitcoin regularly using the DCA strategy.
People seems to be complicating the concept of emergency funds, hence it is important to set the record straight before a potential will spend months building emergency funds before starting to invest in Bitcoin. I read in this thread where someone said that you have to build your emergency funds first before you buy your very first Bitcoin and I was like, what is the purpose of such emergency funds when there is no Bitcoin investment it is set up to protect. The moment an investor have discretionary income after settling basic needs, it is ok to buy Bitcoin first at those early stages even if the discretionary income is not big enough to set a sizeable portion aside as emergency fund. After purchasing the Bitcoin, he will then see the need to protect the Bitcoin from sudden sell off and that is where he will start working on the emergency funds. Like I said, this is in a situation whereby the discretionary income at the beginning is not big enough. The key thing is to buy Bitcoin first, then work towards the emergency funds as time progress... you might even be lucky that at those early stages you will not encounter any emergency that will make you sell your Bitcoin because you are highly motivated to own a Bitcoin portfolio. However, as soon as it is practically possible, an investor must set up emergency funds and also try to resist the urge of investing the emergency funds into Bitcoin so it can serve the purpose for which it was created.
I get the logic behind having an emergency fund before buying Bitcoin, but in reality, it is not always practical,especially for someone with a small or irregular discretionary income. Waiting months to build a fund before getting any exposure can mean missing out entirely if the price moves significantly in the meantime..........imagine someone has $100 left after covering basic needs each month. If they spend five months saving $500 for emergencies before buying any Bitcoin, they risk sitting on the sidelines while the price rises 30 to 40%. Instead, they could put $20 into Bitcoin right away and use the remaining $80 to start building their emergency fund, adjusting the balance as they go. This way, they are in the market early but still working toward financial security.
An emergency fund is still essential because it stops you from panic selling Bitcoin when life throws you an unexpected bill. But it doesn’t need to be fully built before your first satoshi. A balanced approach is buy small amounts of Bitcoin early, build the fund in parallel, and never dip into it for investments... that keeps you both protected and invested.