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..
Maybe you have various funds, and you are used to keeping around $3k to $5k in various accounts for emergencies or whatever, and you will sometimes tap into those funds, but you don't ever let the funds go below $3k absent some really extra-ordinary circumstances, so in some practical sense you are treating $3k as emergency funds and whatever is above $3k you are treating as reserve funds.
So maybe there might be one day that you know that you are going to be paid within 4 days, and you know that you will receive around $2k in extra funds, beyond your expenses.. so then on purpose you dip into your emergency funds and you cause it to go below $3k and you ONLY do that because you are confident that you will be able to replenish it in 4 days. You are taking risks and it is a calculated risk that some guys might choose not to do.. and some guys would feel way more comfortable to just wait the extra 4 days because even the high confidence level is not enough to dip into the funds and your reason for doing so was not strong enough. Maybe there was a flash dip in the BTC price and you wanted to use the money to buy bitcoin 4 days earlier than you regular buys.
Guys enforce their own rules and set forth their own parameters, and if they screw up, they are going to have to pay for it, and frequently guys will get better at figuring out limitations with more experience, and also the guy might come to realize that his bitcoin investment is right around $6k put into it, but its value is something like $12k, so he feels that maybe he might want to keep other kinds of back up funds besides his usual way of keeping his funds because he really wants to feel like his bitcoin is protected since it is starting to get quite large... So maybe he establishes another fund in which he invests into something, but the fund is still liquid, but it would take 2 weeks to withdraw from it.. so it is an extra back up emergency fund, that he knows is available but he has to begin the withdrawal process 2 weeks in advance if he is going to tap into it. Guys can get creative and the larger their bitcoin stash gets they might develop greater confidence, yet they also might want to take extra measures to protect portions of his stash in more archived kinds of ways.