but I think the part that might confuse people is how you separated emergency funds from reserved funds. In financial planning terms, they are usually considered the same thing that is cash set aside for unexpected needs. If we start introducing another layer like reserved funds, it could give beginners the impression that they need to maintain multiple categories before they even think about Bitcoin, which might not be realistic for most people.
What actually matters is exactly what you pointed out, is that Bitcoin investment should come only from discretionary income, not money that is supposed to keep you afloat during emergencies. The clearer we keep that line, the less chance that people will end up mismanaging their finances in the name of stacking sats.
Emergency funds and investment funds are created for completely different purposes so they should never be mixed together. Emergency funds are mainly kept to deal with sudden job loss, medical expenses, or any other unforeseen situation. Therefore it should always be kept in a place where it can be easily converted into cash and there is no risk of market fluctuations.On the other hand, the money that should be used to invest in bitcoin should be the money that even if lost, your financial position will not be damaged, which is called excess or discretionary income. If someone invests in bitcoin with an emergency fund and the market falls, then it will be difficult to withdraw that money if necessary and will be in great financial danger. Therefore, it is necessary to keep a clear separation. The emergency fund will be in a safe and risk-free place, and bitcoin will be invested only with excess money. If you follow these boundaries, it will be possible to invest while maintaining financial security.
And I think the main purpose of holding Bitcoin is for future security. So if there is a bad situation in life where it is seen that he or his family members will need a lot of money for some medical treatment which is not being done even with the reserve fund and emergency fund. Then he will solve this kind of problem by selling Bitcoin as a last resort.
Ahh yes… I get, but honestly, if someone really takes their emergency funds and savings seriously, Bitcoin should not even touch that conversation. Like, the whole idea of a reserve/emergency funds is to cover life sudden expenses. If your emergency funds is solid, growing, and you have been consistent with it, then selling your Bitcoin for those moments may not be needed. I feel it is meant to be untouchable if you play your card right, balancing things..
People do panic and rush for their Bitcoin stack because they never built or properly managed their emergency funds, and that is the trap. But if you have been disciplined, even if life throws some crazy curveball, the emergency fund steps in first. Your Bitcoin stays untouched, doing its thing, slowly stacking up value for your real future moves, not the small fires..
Grace333 you are correct, one important aspect of having an emergency funds is to help you during emergency time when you have no funds on you to solve the emergency problem, when you have money with you and you have an emergency you may not dip hands into your emergency funds if the money with you can take care of the issue so emergency funds is for emergency issues that comes when you have no money to solve the issue or emergency, so basically when you have an emergency and you have money with you to solve that emergency without it disturbing your basic needs then there's no need dipping hands into your emergency funds.
Some people when they have emergency and they have money with them which they can use to solve the emergency without it affecting their basic need they dip hands into their emergency funds which is not supposed to be like that your emergency funds should be used when you have no other alternative.