Topic: The practice of self insurance and a boost to personal finance - page 2. (Read 188 times)

The concept of emergency funds have long existed in the business but it was not called by that name. It is actually a mechanism for risk management because it helps the investor in managing the investment by eliminating the chances of selling some or all of the investment before the time it was planned to. This is just like an investor not putting all his money into the investor instead putting part while setting some funds aside for other needs such as you highlighted. This is not peculiar to investment in Bitcoin or cryptocurrency but across several sectors, plans must be made for basic needs and other needs that may arise which were not factored into planning and budget.

Personally, I have a fixed percentage of my income I invest in Bitcoin and until I change my strategy, that amount will be constant as I am using the DCA method. While being invested, I understand the importance of living, leisure and rest, so I also make provisions for these because I don't believe in punishing myself now with plan to only enjoy at old age. I have to live life well now, enjoy within my limits, invest and also save for retirement.

It's not enough to have just an emergency fund, this is a recent thing for me and I got to say that this is an eye opener to me, insurance is really useful especially if you don't have a lot of money that you save up, at the end of the day, the emergency fund wasn't enough to cover stuff that were to come to this person, although this person was insured, things are still complicated for the loved ones left behind. Make sure that you find the right insurance for yourself, didn't know it would matter but it seems that it's also a factor, how the person that sold you that insurance treats you and makes an acquaintance of you and that you're not just a number.

What is your reaction when financial storms occurs or when unexpected expenses arise, is your first answer going to ask for money from the friend or taking a loan from the bank, how have you been managing your finance and mitigating unforseen events that arise in life, today I want to bring to light what many of us may already know and practice or what we have neglect called self insurance.

Having a financial safety net could be all the difference between financial stability and financial disaster which are just two sides of same coin, self insurance is simply accepting responsibility for your financial wellbeing and that includes ensuring that panic and States of extreme lack of funds is eliminated or reduced to a minimum.

How can this be achieved, yes we can't stop life from taking its toll and bad things from rising from the darkness but what we can is shield ourselves and protect all our financial assets by having a financial safety net that we can easily dive into in difficult times called an emergency funds.

Many of you already know about this but in this article I'll like to throw some light on it and if your a newbie hearing this for the first time hope it helps you.

What is an emergency funds
This is a money that is kept aside to cover up for unexpected expenses or big financial emergencies that may occur, this could be some situations like house repair, health challenge like an operation, an emergency funds mostly consist of 3-6 months of your living expenses.

Why Do I Need an Emergency Fund?

-Unexpected expenses: car repairs, medical bills, home maintenance etc

-Loss of income: you can use that funds to back yourself up in situations of job loss, severe illness or injury

-Financial stability: helps avoid debt and reduce stress

Benefits of Having an Emergency Fund

- Reduces financial stress and anxiety that may result from unexpected emergencies.

- Helps avoid debt and high-interest loans

- Provides peace of mind and security

- Allows for flexibility and freedom

How to Build an Emergency Fund

- Start small: begin with a manageable goal, like $1,000

- Automate: set up regular transfers from your checking account or allocate little savings.

- Prioritize: make saving a priority just like you invest or spend on bills.

- Consider a separate account: keep your emergency fund separate from your everyday spending money so you won't be tempted to touch it

Notes to take

- Review and adjust: regularly review your emergency fund and adjust as needed, you should take note that the higher or more income and financial level you achieve there is also need to increase the size of your emergency funds.

- Avoid dipping in: try to avoid using your emergency fund for situations that are not real emergency or you can solve from your reserves and in most cases only use emergency funds for server emergencies.

- Consider a emergency fund challenge: challenge yourself to save a certain amount in a short timeframe, that way you can help yourself to build a saving habit quicker.


Having an emergency fund is also important for a bitcoin holder cause it it help you in achieving a more long term investment than someone that doesn't.