I have had a couple of family emergencies in the last couple of months. This has meant I have not been able to post my blogs. For all my followers, I remain committed to posting about all-things financial literacy and independence, so please bear with me during this period. I plan to be back to weekly posts soon.
So today, I want to attest to the fact that having an emergency fund is powerful! It affords one the power to immediately respond when life comes knocking (like we all know it does, from time to time)
When the family emergency referenced above hit, funds were immediately available for me to access. As alluded to in my previous post it is important to maintain an emergency fund. The general concession is to build a pot worth six months of your living expenses, but I prefer to make it a year of one’s living expenses. I have never had a situation where it’s become necessary to utilise my emergency funds, but when the situation (life threatening it was as well) hit, I was totally ready (financially) for the unexpected! My emergency pot came in handy and I was was glad to have it; it was a no-brainer for me to turn to it. So as before, I once again advocate for maintaining an emergency fund; once you get to a stage where you’ve paid down/off your debts, start to build your pot.
Also, do you remember my post about crypto and the minimal amount I had invested?
Well, by the time the emergency referenced above hit, the value of my crypto investments had grown exponentially to the extent that I was able to draw down six times my original investment and still maintain an my original investment and a little bit more as investment. About a week after I drew the funds out, the crypto values all fell! I got lucky to have cashed in when I did, so for me, as said in my previous post, crypto is too volatile and because of its volatility, my investments in it will continue to be minimal – a very small percentage of my investment portfolio.
Message here is, emergency funds are absolutely necessary, and, in my view, it is worth holding small investments in crypto in spite of its volatility. The key is to not put all one’s investment in it.
Being able to realise the gain at the time I did, however helped cover the cost of the trip I had to make in relation to the referenced family emergency. But of course, that also means I have triggered a tax liability, so the gains will need to be included in my tax returns at the end of the year. I however think my capital gains allowance would mean I won’t actually have to pay any tax on the gains, when the time comes.
Also, it is important to make use of money when necessary; that’s what it’s there for (it is a tool), which is what I did both with my emergency funds & my crypto investments.
What’s your experience with emergency funds; do you agree that it is necessary? Share a time when having it came in really handy for you . Also, share a time when you actually realised the gains on your crypto investment and how that has impacted your crypto-investment decisions.
Thanks for continuing to read and like. Would be great to have your comments and views as well, so please leave them in the comments below.
📝 Originally shared under my first blog, bitalks; part of the journey that shaped Life’s Riches.