Unit 1 · Level 3 · Goals & horizons
Three buckets
Think of your money as workers with different jobs. The emergency bucket (3-6 months of expenses) exists to absorb shocks: a broken boiler, a lost job. The mid-term bucket funds things 2-7 years away: a car, a wedding, a house deposit. The long-term bucket is for decades-away goals like retirement. Same euros, wildly different rules for each.
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What you get asked
What is the emergency bucket actually FOR?
The emergency fund's return is measured in avoided disasters, not percent. It's the wall that keeps a burst pipe from forcing you to sell investments at the worst moment.
Match each bucket to its job
Each bucket has a different horizon, so each gets different rules. Mixing them up is how people end up selling stocks to fix a car.
A common rule of thumb: keep ___ months of essential expenses in your emergency fund.
3-6 months covers most job losses and surprise bills. Freelancers or single-income households often stretch toward 6 or more.
Lena has €8,000 total. Her essential costs are €1,500/month and she wants to invest. What comes first?
Three to six months of €1,500 is €4,500-€9,000. The emergency bucket gets filled first, because it's what lets the other buckets stay untouched in a crisis.
Why do planners insist on separating buckets instead of one big account?
A bucket is really a label for 'when I need this and how much risk it can take'. Clear labels are what keep panic from raiding the long-term pile. 🐜
The rest of this unit
Before you pick a single fund, decide what the money is FOR and when you'll need it.