Enlightenment about investments is gradually increasing, more people are becoming aware that leaving their money in the bank depreciates over time. People are excited to invest their money in profitable businesses that have track records of giving returns on investment. But unfortunately some of these people don't understand financial management especially the low income earners. There's need to understand that before you go into any investments especially the ones that takes long term to be profitable you should understand financial management first.
In budgeting there are basic or necessary expenses like food, rent and essential utilities like electricity. There are also expenses that are not basic but needful, you need your discretion to allocate funds to them. Therefore any allocation of funds from your income that doesn't fall into basic or must do expenses enters into your discretionary funds.
Well explained, Many times, people rush into investments because they have heard stories of quick returns, but they ignore the foundation which is financial management.. Good break down into basic expenses and discretionary funds, because that is the real starting point.. If all your income is going into food, rent, and light bills, then honestly, you don’t have room to invest yet.. People don’t like hearing that, but it is the truth.. Without that separation between must do spending and optional spending, investments become a burden rather than a blessing. It is not even about Bitcoin, at first it is about having the discipline to structure your income and expenses properly so that investment becomes natural and stress free..
If you want to be investing in Bitcoin, gold, stock or real estate that you will not get profit immediately you need to have a discretionary fund. Example is if anybody's total income equals to their basic or necessary expenses they should forget about investment. There is most likelihood that they will sell their assets prematurely to take care of their basic needs which are essential.
If you want to invest in a long term profitable asset and you don't have a discretionary fund you can do the following. Cutdown on your basic expenses if you can, get a better paying job, get a side hustle, learn profitable skills, do what you can to earn more than your basic expenses.
Also nice point about not forcing investments when your basic expenses already swallow your entire income.. That is also a mistake many low income earners can also make, they put money into something long term, and then when life pressures come, they are forced to pull it out too early, sometimes at a loss.. That is why I like what you said about first working on improving income whether it is by cutting unnecessary costs, picking up a side hustle, or developing new skills.. Personally, I think this is even more valuable than the investment itself because when you have a growing cash flow, the opportunities for long term investing open up naturally. Investing should give you peace of mind, not extra stress about how to meet rent or feed your family..
The last thing I will add is that people underestimate how powerful small, consistent investments are. You don’t need to be earning millions before you start. Even if you only manage to put aside a small amount from your discretionary funds every month, over time, it adds up more than we realize. And beyond the financial growth, it also builds patience, discipline, and a mindset that prepares you for bigger opportunities.. Long term wealth is built on habits, not one time lucky breaks.. That is why I really like your point, discretionary funds are not just numbers on paper, they are the safety net that makes investment good for the long run..