Topic: The practice of self insurance and a boost to personal finance (Read 189 times)

Nice thread you open here, great article, thumbs up. However, there is difference between an ideal situation and real situation. What you just discussed are mostly ideal situation because they seems too perfect, most bitcoin holders are real situations where mostly don't have time to do this or if they have the time, they don't have the resources to do it as mostly people that invest in Bitcoin are also looking for a way to buy, hold and sell later for profit and then leave that dream life you just explained.

What I will emphasize on the things you have said is hold a significant amount of money with you as an emergency money so you can enjoy holding you Bitcoin, if you invest in Bitcoin without any backup plan, you are likely to sell your Bitcoin the moment emergency situations knoct at your door.

I don't think it hard to have emergency funds, if you wish to have it in your account, you can start saving some money that you are not going to touch or invest in BTC which is the best way to create emergency funds for future purpose.

Inside The emergency funds, you can solve your children school fees, you can support your husband through the emergency funds, you can solve house rent through the emergency funds which is very necessary for every BTC hodlers to have emergency funds.

You can only touch your emergency funds to solve anything that will make you to touch your long term hodling, I have seen many people changing their minds to sell their BTC in the bear run because they didn't create emergency funds for themselves.

Moreover if they're sandwich generations where they not only work for themselves, but they also have to provide their parents and their younger brothers at the same time.  

Someone will not become rich if they can't manage their money in the first place.

Imagine you can save $5 per month for 2 years, which mean you have $120 emergency funds. Unfortunately you're sick and need to seek medical treatment, you have to pay medical bills which cost you $200. Your emergency funds can help, but it's not enough and then you need to borrow money from your parents.

Now, you have to work in order to pay your loans and you don't have any money left. Then Troytech2 aka your friend ask you "do you have emergency funds?", you said "nope, you need to work to pay off your loans". But Troytech2 don't care with your financial condition and say you can't manage money...

It's back to my first post, making more money > money management.

Car maintenance or repairs, expenses for medication, and house repairs shouldn't be covered by emergency funds. You have to budget for these expenses because they will surely come. Medical bills and others are not unexpected expenses because they will always happen. Emergency funds are money set aside to settle needs when you don't have any other means to solve them. These funds usually become important during the loss of a job, natural disaster, or incapacitation caused by sickness or accident. Generally, it is a fund set aside for unforeseen circumstances in the future.


The reason why people claim that they lost money investing in Bitcoin is because they sold prematurely. And the cause of this early sales which usually results to losses is because they don't have emergency funds. If you don't have any financial backup after investing, you might tbe forced to sell your coin lower than you bought it because you really need the money. But having emergency funds will protect your investment from early liquidation.

They can have their money stored in fiat currency or in cryptocurrency but a classic advice in finance is "Don't put all your eggs in one basket" and it can be applied in personal financial management.

Storing all money in either fiat currency or Bitcoin or cryptocurrency is bad because it is against that principle. It is bad in risk management and we should avoid this bad practice.

Life is uncertain and we might face with emergencies any time, nobody want it but we can not avoid or control it so we must have our preparation, in finance, in reserved money, for emergencies. 10% to 20% of our capital for emergency fund is good enough in my opinion.

It is from this forum that I learned that debt is not all bad and is not something that should completely be avoided and that one information that the rich has over the poor is the ability to take advantage of debts and loans. Having emergency money is necessary but your emergency fund may not be enough for you to take some financial risks with and in some cases it's not advisable for you to take a huge risk with your emergency funds because it leaves you open. Knowing how to get good loans with interest rates and good payment plans to set up businesses that you are sure of will yield profits even higher than the loan and make it comfortable for you to pay back is a skill to master.

I'll prefer you stick to the topic, I don't remember offering solution to having extra income, having emergency funds is crucial for everyone to practice, there is nothing wrong with keeping some funds untouched to cater for unforseen events, the problem for most is not even how much they earn but their high spending habits and they forget to keep some savings available, why i wouldn't disagree that they are sole sole have very little income, you must also understand that everyone likes an excuse to escape reality. The truth is if you keep no money for unforseen events when it comes you would either borrow or get overwhelmed by that situation, so either rich or poor everyone can afford an emergency funds cause its relatable to your finance.

If I am earning only 50$ a month I can decide to keep 5$ as an emergency savings, there is very possibility that emergency won't arise every month so by the time it comes I'll be more than prepared with my savings. And I'm sure that there are some that are earning low that are already practising keeping an emergency funds available.

That is true because if you don't have an emergency fund, as a Bitcoiner, there is a possibility that your Bitcoin holdings will be sold by you. I've seen stories like that and they have regretted that they didn't saved for themselves while holding Bitcoin. So, if you are someone that you still don't have it, you need to plan your accumulation not just with Bitcoin but as well as your emergency funds and savings. No doubt that it's a big help to you when you're able to have one.

Exactly, that's why for average individuals, there's no such thing as emergency funds, we could be just living day to day to survived and just have the basic necessities and pay our rent and living expenses and then left with nothing.


That's my point, and most likely we don't have enough money in our bank to call emergency funds or do we think of having like 3-6 months of our your living expenses.  We just barely survived and most likely only the rich people can have the luxury to have this so called emergency funds.

The thing is that it's hard to have  emergency fund. I mean yeah we save and all of that, but not sure if others are treating like a emergency fund as there could be individuals who are going to immediately withdraw it in my opinion.

And for me, emergency funds are not to be touch unless it's really important and it will like to have a buffer of 6 months before you can call it your emergency fund. For others this is going to be difficult to save that much money in my opinion.

I do have a multiple funds for the security and retirement at old age.
I have a pension fund where I deposit 10% of my salary, it's automatic process as it gets deducted from my payroll. I get the benefits once I reach 60 as monthly income or if I decides to quit it early and take everything as cash at once.
Similarly I have a life insurance with a 40 years coverage. If I don't die early, I get the cash and interest but if I die, my family would get the double the amount I would have saved in 40 years.
I have another optional fund which provides me interest and stocks depending upon how much profit they get in what form. I started it with 17.5% of my salary but as I took stocks and crypto trading on my hands, it's now reduced to 2%.
I plan to have a health insurance as I plan on being a parent and looking for a basic one that covers most of costly procedures and illness.

It's true, what people will not be able to do when their income is not sufficient for their main needs is to have reserve funds and also invest. People in this category are very likely to live in debt, so having reserve funds and investing is not something they can do. So suggesting saving or investing in people like that is a mistake, because what is needed is more income and the way to do this is by giving them a job.

With a large income, he will be able to start managing his finances, what percentage should be saved and invested and what percentage can be spent, managing finances is basically not a difficult thing, the most difficult thing is managing a very small amount of money which before receiving a salary is already gone in a matter of minutes on paper because the income is small.

There are far fewer of them than you might imagine, especially if they live in developed countries. There are many cases of people who could not make ends meet and after getting serious about personal finances, they saved an emergency fund and reduced or eliminated debts in a short time, especially consumer debts.

Some people barely make ends meet as is, so getting an emergency fund is out of question for them. But overall, I agree it's a good idea to have some savings, at least, which can be used for and emergency or just occasionally for big purchases, holidays etc. I don't think it's necessary to separate such funds and to have money you literally never use, just waiting for an emergency to happen.

It cannot be denied that many people still receive low wages from the companies where they work. However, they can try to manage their finances to meet their living needs and save some money for emergencies. I'm sure these people keep trying to do it to prepare themselves well for the future.

Even though it is difficult to set aside a small amount of money, they still try. I often find people like that and many tell me that apart from trying to save money, they are looking for additional work. By earning extra income from extra work, they can earn money and save some of the money.

Those who want to prepare for their future will do many things, including getting additional work. Only a strong desire can help them have savings and suitable investments. But not many people do it because they don't want to try. That's the difference, whether you want it or not.

or just find the best insurance there is where it could cover most of your problems and at the same time having emergency fund I think its the best way to face whatever problem may arise.
the insurance helps cut down expenses that gets covered by the insurance company, all the while you still have some money left, the disadvantage though, it gonna take up quite a big share of your monthly salary.
definitely not affordable for most of people but its indeed the safest option there is.

other than that, try to earn money as much as you can, work hard, get higher position with better salary, then you're set even then you're more likely gonna need insurance.
but sometime you should be selective, not all insurance are good, some of them are plain trickery.
most of the time anyway, having emergency fund can do, that if you can figure out how much expenses usually gonna be spent for emergency situation like being sick.

Life is very unexpected and things happen even without you expecting it. You might have a few dollars saved up but if in case something immediately happens and you do not have enough of a money to cover up the expenses, insurance can potentially save you. There’s different kinds of insurance mainly being life, health, house, and auto insurance

Some would argue that insurances are very expensive and inaccessible for other people. That is true and it’s definitely a privilege to have access to an insurance. In this time, let us all be financially responsible and secure.

The biggest problem here is the low wages of other businesses and companies, so no matter how much savings people make, they have nothing to save, along with inflation, the normal wages are only used for the necessities of life, like a person goes into survival mode because he works only to have something to sustain to survive each day that comes. If they don't have savings, how can they have an emergency fund? No one doesn't want to have savings, insurance or investments, it's just that it's very difficult to save even a little amount in the situation they have and we can't blame that because that's the reality that happens to simple people.

While it is generally good advice, you should definitely consider age as a factor here. It is nice to have 3-6 months worth of salary saved up in an emergency fund, but it's often not realistic in most peoples' lifestyles and you'd actually be better off blending it with an investment strategy. If you really pushed it to the extreme, with 6 months worth of income desired as your safety net, then really go for 3 months in a savings accounts and 3 months invested in index funds. Sure it will take little dips during recessions, but most of the time it will be accumulating much higher than a savings rate with similar levels of security. When you're younger, there is also less likelihood of either self control and having a strong enough job that allows you to keep this, so settle for even 1 month if you can.

First and foremost, how can someone have emergency funds if they didn't earn enough in the first place?

Nowadays, most people problem aren't money management, but it's how to earn enough money every month. If people already learn a lot, I believe they will have some amount of money that they didn't use, so they will learn to save money. If they have save a lot money, they will learn how to invest etc.

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.