Yeah true, because emergency fund is something everybody needs, not just people who put money into bitcoin or any other investment. Life is full of surprises, sickness, accidents, sudden bills, job issues and when those things come, it is that emergency funds that saves you from panic or from selling off things at the wrong time. While Reserve fund, is more like a planned backup, money you intentionally keep aside to protect your bigger financial moves. They might sound similar but the use case is completely different, one is to rescue you instantly, the other is to support your long term structure.
That is why I also don’t agree when people mix the two together, because it can confuse beginners. Emergency funds are for survival and peace of mind, while reserve funds are more like insurance for your financial goals.. Emergency money is a must have, it is like a shield against the unknown. So yeah, you are right, linking it only to bitcoin alone does not give the full picture..
The role of backup funds in long-term investment success cannot be denied. Be it investment or real life, good financial management is important in both cases. It is especially important to keep backup funds in your financial management. I personally like to organize the backup fund into three levels. (1) Cash flow (2) Reserve fund and (3) Emergency fund. It is planned in such a way that I do not have to go to the emergency fund even in an emergency.
During normal life, I spend from cash flow for any need and keep spending from cash flow and replenishing it. When I face an emergency, the first fund for my use is cash flow, the second is reserve fund and the third is emergency fund. Even each fund is sufficiently replenished with fiat as needed and is ready to be used at any time. Most of the time, there is a possibility of resolving the emergency before the reserve fund is exhausted, if your emergency situation is not resolved even in the long run, then the emergency fund is there as a last resort for you. When all other funds fail, you should take help from the emergency fund, it is your last hope.
Respect how you organized your fund, you know what really stands out to me is that money management only works if it feels natural in real life.. Most people think they will be disciplined in an emergency, but when stress comes, logic usually goes out the window. That is why I like your idea of building funds in layers, because it is not only about how much money you have, it is also about removing the temptation to touch the wrong pot too early.. If you know there is cash flow available for the day to day activities, your brain does not automatically panic and run to the reserve or worse, liquidate investments.. That separation alone can be the difference between staying on track or derailing your long term plans and goals.
I also think the order of setting up those funds depends a lot on someones lifestyle and income stream.. If you are living with inconsistent earnings, a quick access cash is almost like oxygen, it buys you breathing room before you even think about a big emergency fund.. while on the other hand, if your income is steady and predictable, you might have more freedom to have a formal reserve and let the emergency pot grow quietly in the background.. Either way, the principle is sha the same, do not let real life force you to touch assets that were meant to stay untouched..
You know all these structures, cash flow, reserves, emergency fund, are really just tools to protect the bigger picture.. Whether the bigger picture is Bitcoin stacking, or just financial stability, the logic does not change.. The stronger your buffer, the less chance you will need to sell at the wrong time or abandon your strategy half way..