Before diving into Bitcoin, I always set aside some money for an emergency fund, and it's been incredibly helpful and effective when I really need it. We never know what the future holds, when we might run out of money, and having an emergency fund can help us overcome any financial challenges we face.
And after diving into Bitcoin, my long-standing emergency fund plays a crucial role in my investments. I immediately set aside money for my emergency fund after prioritizing Bitcoin purchases upon receiving my paycheck and also prioritizing my basic needs. I always do both simultaneously, but the percentage allocated to my emergency fund is smaller than it is to Bitcoin. Everyone has their own strategy for how long or how many months it takes to build an emergency fund, and for me personally, as long as I can achieve both without sacrificing other needs, I think that's much better. I also plan to use my emergency fund for my child's needs, as he will start school in about a year, and I can use my emergency fund for future needs and beyond as much as possible without having to use Bitcoin prematurely.
Even though you seem to be calling all your back up funds emergency funds, there are likely some of the funds that you are treating as reserves, since if you know the use of the likely use of the funds and you consider the funds to have flexibility in the ways that they can be used, it is most likely that those flexible back up funds are reserve funds rather than emergency funds, even though they can also be used for emergencies, if needed.
The thing is a lot of times we call everything emergency funds, but some of that money is really more like reserve funds. They are the money/funds you can use more flexibly, not just for emergencies, even though they can cover emergencies if needed. The difference is really about intention, emergency funds are strictly for those unexpected and urgent situations, while reserve funds are more like a safety net for things you might need or want.
It is easy to mix them up because, at the end of the day, both are there to give you Fin. security. But i think knowing the difference actually makes planning a lot easier. When you know which funds are untouchable and which you can use more freely, you reduce stress and make smarter financial moves. It is not about having less protection, it’s about using your money in a way that works best for you..