JJG’s Outline of Bitcoin Investment Ideas

[Nwaswago]

But the real question here is, does the person understand what is discretionary money? Suppose someone has $100 in their hand after paying for necessary expenses, but that is their entire cash balance and there is nothing else to use in case of an unexpected expense in the next two weeks. Then you can't just put the entire $100 in Bitcoin and say that it was discretionary income. Part of common sense is to have some cash cushion and not buy Bitcoin in a way that will cause problems if the slightest expense increase. If you have discretionary income, there is no need for much preparation, but you should not invest in a financial reckless way. And I agree with you. If $10 is your reasonable starting amount, then there is no problem in starting with $10. Later, when income, discretionary funds and cashflow are strong, the amount can be increased.

Don’t get yourself confused, if after spending on all necessary needs and want and a folk have $100, that his/her discretionary income, and the person can decide if to invest all on bitcoin or if he can invest just a little and from there he can decide to build both emergency and reserve funds, but it a matter of how he wants to do it.

So it not a matter of common sense but preference. All investment have a certain target so some might give themselves a certain timeframe to reach such target, so investing little by little might not be the way for some people.

I think the real distinction is between discretionary income and money you can afford to risk. Having $100 left after expenses doesn’t automatically mean the full $100 should go into Bitcoin. A solid approach is to protect your cash buffer first, then invest what you genuinely won’t need soon.
Small, consistent buys can build discipline, while larger buys may make sense when cash flow and reserves are strong. The goal shouldn’t just be reaching a target—it’s reaching it without putting yourself under financial pressure. That balance is where the real strategy lies.

[Jostern]

Your points are confusing here, @Cgrexp.  Mere disorganization should not stop any bitcoin newbie from being able to start buying bitcoin if they have discretionary funds.  And, yeah, there are abilities to learn from practice, which is a good justification to get started buying bitcoin as soon as a person realizes that he has discretionary funds, and surely newbies may well have to moderate their beginning position size based on their lack of organization, lack of knowledge, lack of skills, but they can use their best judgement to get started slowly and have bitcoin as an excuse to improve themselves in the various areas that they might already realize that they are lacking.

You’re absolutely right, I was quite confused when I initially saw his statement, it was quite confusing as well, and would definitely be confusing for newbies, merely being disorganized should not be a reason why a newbie should be wasting time to start investing bitcoin, I believe that as soon as a newbie have a discretionary income he or she should start investing in bitcoin immediately as their is no time to be waiting to be organized, getting started is very important because experience is the best teacher, we tend to learn when we are already into our bitcoin investment, we don’t need to have all knowledge to get started with investing in bitcoin, you can’t learn everything immediately as time goes you’re learning just a basic knowledge is enough to get started, as soon as we figure out our discretionary income is start buying immediately, starting slowly is better than not starting, if you make mistakes when you’re in your early stages you will learn and move on from it and get better and improve in your flaws associated with bitcoin investment.

[ZeroVinsonN]

You ought to be looking at backup funds more from the angle of financial stability rather than only just protecting your bitcoin.

The main reasons why investors create backup funds is to be able to use it to deal with unexpected expenses without having to disrupt their investment. Protecting their bitcoin investment is simply just one of the benefits of having that cushion.

If a person’s monthly essential expenses is $1000, and they have already built a backup fund worth about $6000, then that means that they already have about 6months worth of backup funds and so if it happens that their income increases in that period, it’s not really necessary for them to keep increasing the backup fund to $10,000 or $15,000. They should first of all consider whether their expenses and financial responsibilities have also increased.

Once you have been able to build a reasonable safety net, you can go ahead and focus on putting any extra money you got into other financial goals like buying more bitcoin instead of constantly trying to increase backup fund all the time.

Your example is quite bad, especially since you did not describe the context, and you might even be implying that some newbie bitcoin investor might be in such a situation, which is not a good one and it seems to be way overweighted in cash.  Why is he keeping so much cash?  Does he have any bitcoin?
 
I cannot see very many situations in which guys should be keeping 6 months in cash unless they maybe have 1-2 years or more of their expenses invested in bitcoin, and even then 6 months worth of back up funds is likely way too much.

Brand new investors who might come to bitcoin and they might already have back up funds somewhere in the 4-weeks territory (so let's say that they have something like $1k in back up funds with $1k in monthly income and maybe a $20k per year income (which is $1,667 per month of income), then maybe they would build their bitcoin and their back up funds at the same time, and maybe it would take them a couple more years to get up to $3k expenses in cash.. if we assume that they are investing $222, saving (back up funds) $222 and discretionarily consuming $222.   In my example it is going to take them 9 months to get up to $3k of back up funds.

Don't get me wrong, a person surely could build up more than 3 months of back up funds, since frequently we consider the first three months of the back up funds to be emergency funds, and then they could have other reasons that they are saving up extra money.  Maybe they want to buy a new cell phone or a car or a motorcycle or they want to fix the roof on their house or maybe they want to save some money for buying the dip. 

There can surely be quite a few reasons to build up back up funds to more than 3 months, and even when we are first building up our back up funds, there might be times in which we have to tap into them since there might be pay periods that we are low on income and/or high on expenses, so we might have some periods that we tap into some of our back up funds and then we have to build it back up to where we believe it should be, so we could even have some lopsided growing in our bitcoin versus our back up funds, and after we have 4-ish weeks of back up funds, maybe we will skew our investment towards bitcoin and maybe with my earlier example, there will be a preference to put $350 per month into bitcoin and only $158.5 per month into back up funds and $158.5 per month into discretionary consumption.  These are judgement calls, and of course, the more uncertain and precarious the income and/or expenses situation, then the more back up funds will be needed to account for the uncertainties in the income/expenses.

Pardon me for not clarifying on the context of the example i gave.

I’m not trying to imply that every newbie bitcoin must keep $6k in cash or that six months worth of backup funds is the ideal amount for everybody before they can start to buy bitcoin.

My point is simple, if guys have already concluded on a specific backup fund target and along the line their income happens to increase, they don’t necessarily have to continue upping their backup fund target anymore if their expenses and financial responsibilities haven’t increased. They can simply divert that money into buying more bitcoin instead.

Now whether the six months worth of backup funds is too much, too little or just perfect is another story and it still depends on the person’s income stability, job security, responsibilities, expenses and risk tolerance.

To be more clear, i’m certainly in support of the fact that these are judgement calls that are left for the individual to make and perhaps some people might probably even need more than three months of expenses in reserve depending on their predicament.

.did they have an increase in expenses as well? One thing we should know is that people who are buying bitcoin should make sure to do so within tolerable limits, it's natural to want to increase how much we invest in bitcoin with if we experience an increase in our discretionary income, this is even more likely if we've already set up our backup funds but even with our backup funds in place we should make sure to not be aggressive to the point where it becomes impossible to handle, we should make sure to invest within our means.

[Different patterns]

Many people are disorganized with their finances and that is why they can’t start investing in Bitcoin. Until they realize that they have extra money to spend, they need to decide how much money they are going to start with and if they make a mistake, are they only starting with an amount they are willing to lose, even if they don’t plan on losing it. Practice helps with this kind of thing, and most adults already have this skill, although it may take some practice to make sure they don’t start investing with an amount they can’t afford to lose.

Your points are confusing here, @Cgrexp.  Mere disorganization should not stop any bitcoin newbie from being able to start buying bitcoin if they have discretionary funds.  And, yeah, there are abilities to learn from practice, which is a good justification to get started buying bitcoin as soon as a person realizes that he has discretionary funds, and surely newbies may well have to moderate their beginning position size based on their lack of organization, lack of knowledge, lack of skills, but they can use their best judgement to get started slowly and have bitcoin as an excuse to improve themselves in the various areas that they might already realize that they are lacking.

Exactly my point. no need to have everything perfectly in order before investing in bitcoin, if you invest with your discretionary income, it is also the opportunity to become more organized as you move forward, without delaying your bitcoin investment or waiting for financial organized. you can even start with amount that will not put pressure on your finances and even learn from process. Because that process of you waiting and put everything in order can easily become serious excuses for doing nothing, But as you gain experience that is also a chance to improve how you manage your finances.

[obuoma]

I think the real distinction is between discretionary income and money you can afford to risk. Having $100 left after expenses doesn’t automatically mean the full $100 should go into Bitcoin. A solid approach is to protect your cash buffer first, then invest what you genuinely won’t need soon.
Small, consistent buys can build discipline, while larger buys may make sense when cash flow and reserves are strong. The goal shouldn’t just be reaching a target—it’s reaching it without putting yourself under financial pressure. That balance is where the real strategy lies.

It is called discretionary income because it is money left after you have removed money for your basic needs meaning you can live your life without it but that does not mean you should put the entire funds into Bitcoin. What should determine how much of your discretionary income to be put into Bitcoin is how aggressive you might want to be to achieve your accumulation objectives. In other words, you are expected to invest a good proportion of the discretionary income into Bitcoin and then use whatever is left as protective funds for the investment in case something comes up as emergency which you did not factor into your planning but they cannot just wait. This does not in any way mean that one cannot afford to lose what was invested because it was never the basic needs.

A proper understanding of this sequence is needed to ensure that people invest the right way and not feel pressured when the investment is not giving profits as much as expected.

[Gragebox]

Many people are disorganized with their finances and that is why they can’t start investing in Bitcoin. Until they realize that they have extra money to spend, they need to decide how much money they are going to start with and if they make a mistake, are they only starting with an amount they are willing to lose, even if they don’t plan on losing it. Practice helps with this kind of thing, and most adults already have this skill, although it may take some practice to make sure they don’t start investing with an amount they can’t afford to lose.

Your points are confusing here, @Cgrexp.  Mere disorganization should not stop any bitcoin newbie from being able to start buying bitcoin if they have discretionary funds.  And, yeah, there are abilities to learn from practice, which is a good justification to get started buying bitcoin as soon as a person realizes that he has discretionary funds, and surely newbies may well have to moderate their beginning position size based on their lack of organization, lack of knowledge, lack of skills, but they can use their best judgement to get started slowly and have bitcoin as an excuse to improve themselves in the various areas that they might already realize that they are lacking.

Exactly my point. no need to have everything perfectly in order before investing in bitcoin, if you invest with your discretionary income, it is also the opportunity to become more organized as you move forward, without delaying your bitcoin investment or waiting for financial organized. you can even start with amount that will not put pressure on your finances and even learn from process. Because that process of you waiting and put everything in order can easily become serious excuses for doing nothing, But as you gain experience that is also a chance to improve how you manage your finances.

I also think that waiting for things to be perfect and organized in life can sometimes become an excuse for never actually getting started. A person with available money, can start with an amount that the person will not have to worry about not having to take from needs or expenses. What matters isn't the amount of starting money the person has, but instead can it be invested without becoming a stressful situation.

With that, investing should also be viewed as a trial-and-error process, as that is how a person will learn their own personal risk level tolerance, what and what not to spend money on, and develop good finances slowly over time.

There is no way that someone needs to rush a buy-in a great amount of money into Bitcoin. A small amount that continues to be invested into, and kept within ones financial limits, could be an easy way to gain experience and keep ones finances in good terms.

[Taskford]

Many people are disorganized with their finances and that is why they can’t start investing in Bitcoin. Until they realize that they have extra money to spend, they need to decide how much money they are going to start with and if they make a mistake, are they only starting with an amount they are willing to lose, even if they don’t plan on losing it. Practice helps with this kind of thing, and most adults already have this skill, although it may take some practice to make sure they don’t start investing with an amount they can’t afford to lose.

Your points are confusing here, @Cgrexp.  Mere disorganization should not stop any bitcoin newbie from being able to start buying bitcoin if they have discretionary funds.  And, yeah, there are abilities to learn from practice, which is a good justification to get started buying bitcoin as soon as a person realizes that he has discretionary funds, and surely newbies may well have to moderate their beginning position size based on their lack of organization, lack of knowledge, lack of skills, but they can use their best judgement to get started slowly and have bitcoin as an excuse to improve themselves in the various areas that they might already realize that they are lacking.

Exactly my point. no need to have everything perfectly in order before investing in bitcoin, if you invest with your discretionary income, it is also the opportunity to become more organized as you move forward, without delaying your bitcoin investment or waiting for financial organized. you can even start with amount that will not put pressure on your finances and even learn from process. Because that process of you waiting and put everything in order can easily become serious excuses for doing nothing, But as you gain experience that is also a chance to improve how you manage your finances.

@JJG is actually right, but I think the real risk about starting up even if they are disorganize is. They might overlook the actual risk and misjudge what actually count as their discretionary income.

Also by means they are disorganize this often shows that these people didn't figure out their savings, debts and also their expenses. If they jump without having clarification, they might accidentally use the money they need for their essential needs and other emergency matters.

So what I think better approach to do is.

Better for them to pay close attention on their real discretionary funds, make sure to figure out what actual amount left after they are done paying their bills and other obligation.

Then after that they are free to take position and fine to use small amounts to start their investment.

Also they could able to use their experiences on Bitcoin investment to manage well their finances.

[The Founding Titan]

But the real question here is, does the person understand what is discretionary money? Suppose someone has $100 in their hand after paying for necessary expenses, but that is their entire cash balance and there is nothing else to use in case of an unexpected expense in the next two weeks. Then you can't just put the entire $100 in Bitcoin and say that it was discretionary income. Part of common sense is to have some cash cushion and not buy Bitcoin in a way that will cause problems if the slightest expense increase. If you have discretionary income, there is no need for much preparation, but you should not invest in a financial reckless way. And I agree with you. If $10 is your reasonable starting amount, then there is no problem in starting with $10. Later, when income, discretionary funds and cashflow are strong, the amount can be increased.

Don’t get yourself confused, if after spending on all necessary needs and want and a folk have $100, that his/her discretionary income, and the person can decide if to invest all on bitcoin or if he can invest just a little and from there he can decide to build both emergency and reserve funds, but it a matter of how he wants to do it.

So it not a matter of common sense but preference. All investment have a certain target so some might give themselves a certain timeframe to reach such target, so investing little by little might not be the way for some people.

I think the real distinction is between discretionary income and money you can afford to risk. Having $100 left after expenses doesn’t automatically mean the full $100 should go into Bitcoin. A solid approach is to protect your cash buffer first, then invest what you genuinely won’t need soon.
Small, consistent buys can build discipline, while larger buys may make sense when cash flow and reserves are strong. The goal shouldn’t just be reaching a target—it’s reaching it without putting yourself under financial pressure. That balance is where the real strategy lies.

At the end of the day any investor who doesn't know how much of his discretionary income to invest in bitcoin with should use the 3 way split, with this they can invest in bitcoin with 1/3 of their discretionary income, use another 1/3 for their emergency fund and the remaining 1/3 for their discretionary consumptions, this will help make it easier for them to allocate parts of their discretionary income to things they want to do with it.

[Abbatty]

At the end of the day any investor who doesn't know how much of his discretionary income to invest in bitcoin with should use the 3 way split, with this they can invest in bitcoin with 1/3 of their discretionary income, use another 1/3 for their emergency fund and the remaining 1/3 for their discretionary consumptions, this will help make it easier for them to allocate parts of their discretionary income to things they want to do with it.

You know, when it comes to discretionary income, I don’t think deciding how to allocate it really helps. So long as a person can set aside what he will invest, and also make provision for both emergency and reserve funds, he can chooses to do what he feels like. There are people who after investing, they have other activities to do, such as Casino gambling, gifting friends, or even donating. All these will be done by discretionary income. So an investor just need to make sure he his doing well by his investment and making sure they are protected, after that he can do what he pleases.

A lot of us have life outside bitcoin investment, and we also have activities that will be done with discretionary income. So keep consistent with your investment, protect your investment with both emergency and reserve funds and live your best life out there mate.

[JayJuanGee]

At the end of the day any investor who doesn't know how much of his discretionary income to invest in bitcoin with should use the 3 way split, with this they can invest in bitcoin with 1/3 of their discretionary income, use another 1/3 for their emergency fund and the remaining 1/3 for their discretionary consumptions, this will help make it easier for them to allocate parts of their discretionary income to things they want to do with it.

You know, when it comes to discretionary income, I don’t think deciding how to allocate it really helps. So long as a person can set aside what he will invest, and also make provision for both emergency and reserve funds, he can chooses to do what he feels like. There are people who after investing, they have other activities to do, such as Casino gambling, gifting friends, or even donating. All these will be done by discretionary income. So an investor just need to make sure he his doing well by his investment and making sure they are protected, after that he can do what he pleases.

A lot of us have life outside bitcoin investment, and we also have activities that will be done with discretionary income. So keep consistent with your investment, protect your investment with both emergency and reserve funds and live your best life out there mate.

The three ways to choose to use your discretionary funds are to 1) invest, 2) save and 3) discretionarily consume.

Of course a person can decide to divide those allocations in each of those categories however he likes, and that is part of the meaning of discretionary.  Discretionary means that you can do whatever you want.  Yet, in this thread we are talking about bitcoin investing and even wanting to prioritize bitcoin investing, even though surely guys still can choose their level of prioritization of bitcoin as compared with the other two categories.

We separate discretionary funds from basic expenses because there is some sense that there is not a lot of choice in how much basic expenses are, even though it is true that we may well even frequently have flexibility in our basic expense levels, too, based on our chosen life style.  We can choose to live in a large or small house. We can choose to spend a lot on utilities or smaller amounts.  We can choose whether to buy expensive food or to shop around for less expensive food.  We can choose our modes of transportation and/or how close we live to our work (in terms of transportation costs).   Some aspects of our basic expenses are more flexible than other parts of our basic expenses.

Within the category of invest:, we think about bitcoin, yet there can be other kinds of investments too, yet in this thread we are primarily focused on bitcoin as an investment, and of course guys can come to bitcoin with various other investments, yet many times if guys are either new to investing or in their early stages of building up their finances, then surely I tend to suggest that focusing on just bitcoin and cash can be a good way to start and even remain our focus for 4-10 years or longer before we might feel some needs to start to diversify into other investments.  Surely points in which diversification might start to feel justifiable may trigger at differing points for people depending on how much discretionary income that they have and how much they are able to invest into bitcoin and how well they might be able to build up their back up funds.  I tend to think that diversification starts to become more justifiable when the back up funds start to grow into the 4-5 months or greater sizes and there might be some desire to invest some of that money rather than keeping it in cash, even though it might be a kind of extension of back up funds.

Within the category of savings: both emergency funds and reserve funds are in that category, even though people will call these kinds of cash backups by different names and they might have differing purposes for them that may or may not be strict and may or may not have a long timelines beyond holding money over from one pay period to the next

Within the category of discretionary consumption: this would include any kind of spending that does not fall under basic expenses, including casino gambling, gifts to friends, donating unless that gifting is meant to be as a form of savings (giving money to someone else with an expectation of getting it back in an emergency)

Starting out with a presumption of putting 1/3 into each of the three categories is not a bad starting out allocation, and gives a bit of a balanced prioritization, yet of course, since these are discretionary funds guys can choose whatever level of allocation they think is better fitting to their own circumstances including allocating close to all of the money in any one category and/or allocating close to zero in another category, and personally it seems best to make sure to at least address each of the three categories, even if there is not consistency in terms of how the allocations might be made from pay period to pay period. 

Of course, since we are talking about bitcoin investing in this thread, there tends to be recommendations to try to figure out how to give priority to bitcoin investing and perhaps even making sure that savings are adequate and ongoingly being built too.  At the same time, discretionary consumption cannot be ignored as if it did not exist or presumed to be part of basic expenses.  Guys frequently will be better off in their bitcoin investing if they practice ways to differentiate between basic expenses (needs) and discretionary consumption (wants).

[Showlove01]

But the real question here is, does the person understand what is discretionary money? Suppose someone has $100 in their hand after paying for necessary expenses, but that is their entire cash balance and there is nothing else to use in case of an unexpected expense in the next two weeks. Then you can't just put the entire $100 in Bitcoin and say that it was discretionary income. Part of common sense is to have some cash cushion and not buy Bitcoin in a way that will cause problems if the slightest expense increase. If you have discretionary income, there is no need for much preparation, but you should not invest in a financial reckless way. And I agree with you. If $10 is your reasonable starting amount, then there is no problem in starting with $10. Later, when income, discretionary funds and cashflow are strong, the amount can be increased.

Don’t get yourself confused, if after spending on all necessary needs and want and a folk have $100, that his/her discretionary income, and the person can decide if to invest all on bitcoin or if he can invest just a little and from there he can decide to build both emergency and reserve funds, but it a matter of how he wants to do it.

So it not a matter of common sense but preference. All investment have a certain target so some might give themselves a certain timeframe to reach such target, so investing little by little might not be the way for some people.

I think the real distinction is between discretionary income and money you can afford to risk. Having $100 left after expenses doesn’t automatically mean the full $100 should go into Bitcoin. A solid approach is to protect your cash buffer first, then invest what you genuinely won’t need soon.
Small, consistent buys can build discipline, while larger buys may make sense when cash flow and reserves are strong. The goal shouldn’t just be reaching a target—it’s reaching it without putting yourself under financial pressure. That balance is where the real strategy lies.

At the end of the day any investor who doesn't know how much of his discretionary income to invest in bitcoin with should use the 3 way split, with this they can invest in bitcoin with 1/3 of their discretionary income, use another 1/3 for their emergency fund and the remaining 1/3 for their discretionary consumptions, this will help make it easier for them to allocate parts of their discretionary income to things they want to do with it.

Anyone who is able to figure out their discretionary income should be able to know the amount that will be reasonable and convenient for them unless they decide to be overly aggressive about it which may affect them later if they continue to be over aggressive. This 1/3 method you are talking about can not work for everyone and it is not written anywhere that it is very convenient because everyone discretionary income are not the same, the most important thing is using what is convenient.

[Chinesebaby]

Starting out with a presumption of putting 1/3 into each of the three categories is not a bad starting out allocation, and gives a bit of a balanced prioritization, yet of course, since these are discretionary funds guys can choose whatever level of allocation they think is better fitting to their own circumstances including allocating close to all of the money in any one category and/or allocating close to zero in another category, and personally it seems best to make sure to at least address each of the three categories, even if there is not consistency in terms of how the allocations might be made from pay period to pay period.  

Of course, since we are talking about bitcoin investing in this thread, there tends to be recommendations to try to figure out how to give priority to bitcoin investing and perhaps even making sure that savings are adequate and ongoingly being built too.  At the same time, discretionary consumption cannot be ignored as if it did not exist or presumed to be part of basic expenses.  Guys frequently will be better off in their bitcoin investing if they practice ways to differentiate between basic expenses (needs) and discretionary consumption (wants).

I just read everything you just wrote above, and to be honestly speaking, I agree with everything you just said above 100% in regards to the three ways a our discretionary funds can be used, which involves either to invest, to save and to discretionarily consume it in the best way possible as we can. And judging by the fact how these three are very important, putting 1/3 into any of these three categories is the best approach any individual or newbie who wants to be successful in the future needs to adopt. Because one thing about life is that there will always be "wants", but our ability to prioritize "needs" over want at every moment is one financial discipline that will help us alot along the line. And just as this thread is dedicated for Bitcoin discussion, putting in 1/3 of $100 discretionary funds into Bitcoin consistently is literally not a bad approach, because 1/3 of $100 is actually $33, and If an individual is to invest $33 weekly into Bitcoin, before the end of the year he/she probably would have invested roughly $1,716 and in 5years, that's  $8,580.

[ZeroVinsonN]

Anyone who is able to figure out their discretionary income should be able to know the amount that will be reasonable and convenient for them unless they decide to be overly aggressive about it which may affect them later if they continue to be over aggressive. This 1/3 method you are talking about can not work for everyone and it is not written anywhere that it is very convenient because everyone discretionary income are not the same, the most important thing is using what is convenient.

So they should ignore their backup funds or their discretionary spendings because they don't have enough discretionary income? This 1/3 method is good for everyone and one thing that people should know is that they can split their discretionary income however that works for them, it's not a must that the 3 way split must be equal, you can go 40% for your bitcoin investment, 40% for your emergency funds and 20% for your discretionary spendings, you can even go 50% for investing in bitcoin, 35% for your emergency fund and 15% for your discretionary spendings, it all depends on which split works the best for you.

[Proty]

Anyone who is able to figure out their discretionary income should be able to know the amount that will be reasonable and convenient for them unless they decide to be overly aggressive about it which may affect them later if they continue to be over aggressive. This 1/3 method you are talking about can not work for everyone and it is not written anywhere that it is very convenient because everyone discretionary income are not the same, the most important thing is using what is convenient.

So they should ignore their backup funds or their discretionary spendings because they don't have enough discretionary income? This 1/3 method is good for everyone and one thing that people should know is that they can split their discretionary income however that works for them, it's not a must that the 3 way split must be equal, you can go 40% for your bitcoin investment, 40% for your emergency funds and 20% for your discretionary spendings, you can even go 50% for investing in bitcoin, 35% for your emergency fund and 15% for your discretionary spendings, it all depends on which split works the best for you.

It is not a good idea for an investor to neglect or forget to build an emergency funds or discretionary spending because of having low discretionary income. The idea of dividing discretionary income into 3 parts is a great one , however it is not that all investors that must follow this same pattern. Everyone should do what will work best for them as per there financial situation. An investor can decide to follow the percentage you have given and another investor may choose to use a different percentage. The most important thing is using the percentage that goes well with their financial situation.

[Rockson1]

There are people who are already quite disorganized with their personal finances. And they can benefit if they spend some time getting their personal finances in order. So that they can really determine how much discretionary funds they have and how much they want to keep for investments, ancillary funds, and discretionary spending. Many people are disorganized with their finances and that is why they can’t start investing in Bitcoin. Until they realize that they have extra money to spend, they need to decide how much money they are going to start with and if they make a mistake, are they only starting with an amount they are willing to lose, even if they don’t plan on losing it. Practice helps with this kind of thing, and most adults already have this skill, although it may take some practice to make sure they don’t start investing with an amount they can’t afford to lose.

Guy take a dip breath, you sound confused, do not get it twisted though, why are you making thingd difficult for folks to understand what you are saying, is there any other discreationary income elsewhere apart from the one we know, if folks discreationary income is available I don't think their should be any controversy unless their no discreationary income then guys has no reason to force themselves into Bitcoin investment, if any beginner should consider what you said here, non of them will ever invest in Bitcoin because things needed to be solved with money doesn't end, good financial management is what helps every investor, but with the excuses you listed here, Bitcoin investment will be far from anyone reading them.

[Gragebox]

It is not a good idea for an investor to neglect or forget to build an emergency funds or discretionary spending because of having low discretionary income. The idea of dividing discretionary income into 3 parts is a great one , however it is not that all investors that must follow this same pattern. Everyone should do what will work best for them as per there financial situation. An investor can decide to follow the percentage you have given and another investor may choose to use a different percentage. The most important thing is using the percentage that goes well with their financial situation.

No magic percentage There is no definitive percentage for all, since every individual's financial income, outflow, liabilities and commitments will be different. Splitting one's discretionary cash into three may be a thumb rule but not one you have to blindly stick to. Ideally, I'd feel it is important to build up an emergency fund first, before taking major investment bets.

It will give an investor breathing space should any sudden requirement force the individual to liquify an investment at a loss; which might compound the financial anxiety.

However, I am conscious this methodology may not be suitable for the low earning individual, whose entire discretionary funds are required for meeting his day-to-day needs and the odd emergency. Ultimately, it's all about maintaining a healthy balance of saving, spending and investment and stick to a method that's practical.

[Joy- maker]

Splitting one's discretionary cash into three may be a thumb rule but not one you have to blindly stick to. Ideally, I'd feel it is important to build up an emergency fund first, before taking major investment bets.

It is not composary to follow that rule exactly, but it is essential to have a clear financial plan, an emergency fund is very essential when investing in Bitcoin, but I don't think it is necessary to build up an emergency fund first before starting your bitcoin accumulation journey.

You can start your bitcoin accumulation journey, without having an emergency fund, what need to do is to build your emergency fund along side your bitcoin investment, waiting to build up an emergency fund first before you start investing in Bitcoin may delay your investment journey and you might also miss some buying opportunities in the process.

[IceLincoln]

But the real question here is, does the person understand what is discretionary money? Suppose someone has $100 in their hand after paying for necessary expenses, but that is their entire cash balance and there is nothing else to use in case of an unexpected expense in the next two weeks. Then you can't just put the entire $100 in Bitcoin and say that it was discretionary income. Part of common sense is to have some cash cushion and not buy Bitcoin in a way that will cause problems if the slightest expense increase. If you have discretionary income, there is no need for much preparation, but you should not invest in a financial reckless way. And I agree with you. If $10 is your reasonable starting amount, then there is no problem in starting with $10. Later, when income, discretionary funds and cashflow are strong, the amount can be increased.

Don’t get yourself confused, if after spending on all necessary needs and want and a folk have $100, that his/her discretionary income, and the person can decide if to invest all on bitcoin or if he can invest just a little and from there he can decide to build both emergency and reserve funds, but it a matter of how he wants to do it.

So it not a matter of common sense but preference. All investment have a certain target so some might give themselves a certain timeframe to reach such target, so investing little by little might not be the way for some people.

I think the real distinction is between discretionary income and money you can afford to risk. Having $100 left after expenses doesn’t automatically mean the full $100 should go into Bitcoin. A solid approach is to protect your cash buffer first, then invest what you genuinely won’t need soon.
Small, consistent buys can build discipline, while larger buys may make sense when cash flow and reserves are strong. The goal shouldn’t just be reaching a target—it’s reaching it without putting yourself under financial pressure. That balance is where the real strategy lies.

This matter has been explained here over and over again even JJG has dissected this issue to make it clear to everyone.
Discretionary money is the money you can choose to invest, save and/or spend at your discretion after settling all basic needs. The part of the discretionary income used in investing is the investable capital which is the amount you can afford to lose.
We advise and encourage using discretionary income to invest so people don’t go using their money for basic expenses to invest. Using the discretionary income to invest provides you with the opportunity of investing responsibly and the flexibility to allocating it into the three parts according to your financial situation.

[Grease5000]

But the real question here is, does the person understand what is discretionary money? Suppose someone has $100 in their hand after paying for necessary expenses, but that is their entire cash balance and there is nothing else to use in case of an unexpected expense in the next two weeks. Then you can't just put the entire $100 in Bitcoin and say that it was discretionary income. Part of common sense is to have some cash cushion and not buy Bitcoin in a way that will cause problems if the slightest expense increase. If you have discretionary income, there is no need for much preparation, but you should not invest in a financial reckless way. And I agree with you. If $10 is your reasonable starting amount, then there is no problem in starting with $10. Later, when income, discretionary funds and cashflow are strong, the amount can be increased.

Don’t get yourself confused, if after spending on all necessary needs and want and a folk have $100, that his/her discretionary income, and the person can decide if to invest all on bitcoin or if he can invest just a little and from there he can decide to build both emergency and reserve funds, but it a matter of how he wants to do it.

So it not a matter of common sense but preference. All investment have a certain target so some might give themselves a certain timeframe to reach such target, so investing little by little might not be the way for some people.

I think the real distinction is between discretionary income and money you can afford to risk. Having $100 left after expenses doesn’t automatically mean the full $100 should go into Bitcoin. A solid approach is to protect your cash buffer first, then invest what you genuinely won’t need soon.
Small, consistent buys can build discipline, while larger buys may make sense when cash flow and reserves are strong. The goal shouldn’t just be reaching a target—it’s reaching it without putting yourself under financial pressure. That balance is where the real strategy lies.

I think you are confused if you  treat  discretionary income as money that must all be invested. Because it doesn't work that way.

For example if someone has $100 left after paying their essentials, that $100 is discretionary money, but they can decide how to use it they could put $20 into Bitcoin, keep $50 for savings or an emergency fund, and use the rest for other need as backup fund in case of unexpected emergencies

Though putting the entire $100 into Bitcoin may be unwise if there is no cash cushion. But that doesn't mean the $100 wasn't discretionary income. Discretionary income is money left after essential  how you divide that money between Bitcoin, savings, emergency funds and other purposes is a matter of money management.

[Charcol]

Starting out with a presumption of putting 1/3 into each of the three categories is not a bad starting out allocation, and gives a bit of a balanced prioritization, yet of course, since these are discretionary funds guys can choose whatever level of allocation they think is better fitting to their own circumstances including allocating close to all of the money in any one category and/or allocating close to zero in another category, and personally it seems best to make sure to at least address each of the three categories, even if there is not consistency in terms of how the allocations might be made from pay period to pay period.  

Of course, since we are talking about bitcoin investing in this thread, there tends to be recommendations to try to figure out how to give priority to bitcoin investing and perhaps even making sure that savings are adequate and ongoingly being built too.  At the same time, discretionary consumption cannot be ignored as if it did not exist or presumed to be part of basic expenses.  Guys frequently will be better off in their bitcoin investing if they practice ways to differentiate between basic expenses (needs) and discretionary consumption (wants).

I just read everything you just wrote above, and to be honestly speaking, I agree with everything you just said above 100% in regards to the three ways a our discretionary funds can be used, which involves either to invest, to save and to discretionarily consume it in the best way possible as we can. And judging by the fact how these three are very important, putting 1/3 into any of these three categories is the best approach any individual or newbie who wants to be successful in the future needs to adopt.

You agree with @JJG, but I think you may have missed or missed his important points. @JJG said that dividing by one-third is just a fairly balanced start. It shouldn't be made a mandatory ratio for everyone. But @Chinesebaby, you've actually confused the issue of giving importance to those three categories and giving an equal one-third to each.

It may be good to consider investing, saving, and personal consumption. But that doesn't mean that dividing by 33.33 percent is the best approach for every new investor.

For example, two people receive $100 in discretionary income after paying all their expenses. One of them may already have an emergency fund, and his job is more stable than the other. But the second one has no emergency fund and his income is uncertain. In this case, do you think it would be reasonable for both of them to stick to the same 33/33/33 ratio?

 I don't think so. Because the first person might be comfortable with putting more in Bitcoin. But the second person might want to keep more in their savings. So it might be reasonable to base the ratio on their individual positions rather than putting them in a fixed ratio formula.