The $100 explain I gave am suppose to split it $50 can go for Bitcoin, $30 emergency fund then $20 for discretionary spending for self.
In making this split, you should have a proper understanding of why you’re putting certain percentage of your income for your emergency funds, certain percent for your DCA and certain percentage for your daily needs. That understanding helps you not to use money meant for investment for emergency funds and as well helps you to ration it in such a way that your investments is not lagging just because you’re trying to build an emergency fund.
Emergency fund is only useful when it’s able to protect your bitcoin when an emergency comes up. If it takes a large portion of your budget such that, the amount you’re putting into your DCA becomes smaller than expected, it becomes another issue.
Newbies that might not be too financially buoyant to buy a lot of bitcoin at a go while simultaneously building their emergency funds and other cash flow might have to reduce on the percentage that goes into their emergency fund while focusing on how much they are putting into their DCA per time. That strategy works and around for placement of right priorities.
I get your point, since emergency is this kind of thing that comes once in a while, then allocating 30% of your discretionary income might look too much. We know emergency funds is important in every successful bitcoin journey, but let not forget that accumulating Bitcoin is the top priority. I know at the end it all down to how every individual want to allocate their discretionary income, but it better to put much in Bitcoin investment.
Maybe something like 15% of your discretionary income will be ideal so you can pump much of your discretionary income into accumulation. There are people who even started their bitcoin investment without having emergency funds, so 15% is not bad.
It is important to maintain a balance between emergency funds and Bitcoin collection. Collecting for the long term is a good goal. However, one should not neglect one's financial security while fulfilling that goal. It is impossible to predict when an emergency will occur. If there is a sudden job loss or an unexpected family need, and there is not enough cash, the investor may be forced to sell Bitcoin at a loss.
However, it is not mandatory for everyone to allocate 30 percent of disposable income to an emergency fund. Some people have stable income while others have irregular income. Therefore, it is not realistic to set the same ratio for everyone. For some, 15 percent may be enough, for others, 30 percent or more may be needed.
The main purpose of an emergency fund is not to accumulate money to buy Bitcoin. It is to create financial security so that one does not have to sell one's Bitcoin in case of emergency. Therefore, one can create emergency savings little by little in addition to collecting Bitcoin. Once the necessary financial security is created, it will be possible to allocate a larger portion of disposable income to Bitcoin collection.
