It has been very tempting for me sometimes to invest everything I have and blow up my emergency fund. When Bitcoin was around 30000 levels was especially hard because I knew it was a good deal and wanted to increase my position in bitcoin. However, it is important to breathe deeply and do not spend your emergency fund and money you will need to spend in the short term.
In this article, I will go into some reasons why you always keep your emergency fund intact. The amount of money you need for your emergency fund depends on your personal situation, but usually between 6 and 12 months' worth of expenses is considered safe.
You may have an emergency
I hope nothing bad happens to you, but... What if you lose your job? Or you have a health issue, you need to renew your car, help out your family or friends. If you don't have an emergency fund you may have to sell out your investment at the bottom of the market, losing a lot of money.
You need the money in the short term
I know that I will be moving out to a new apartment in March because as I am growing up I don't want to live at my parents' flat anymore. This means I will have to spend quite some money on furniture and home appliances. Therefore, I must keep the extra cash. If I don't keep this buffer, I would have to spend all the my emergency fund on short-term expenses and won't be prepared for actual emergencies anymore.
It gives you freedom
Having an emergency fund may help you take the courage to improve your life quitting a job that you hate and take the leap and start a business for instance. If you are living on a pay to check, you cannot take any risk to change your life for the better.
It is important to value happiness
If you are to focus on investing, you may stop living a happy life. I think is good to be frugal, but being happy is very important. So if you know something that makes you very happy, like traveling once a year, save money for that and enjoy your life.
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Valid advise. My girlfriend told me the same thing and I am planning towards having a sizable emergency fund. Usually I either invest or spend. I don't like keeping money I have easy assess to, given that I can be an impulsive spender at times. But I am working on myself and with the help of my spouse I hope to get better at managing my money
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