A few months ago, I got into a dumb and completely avoidable bike accident. My wife and I were biking to meet up with a friend that lives not too far from us. The bike path that leads to our friend’s apartment winds its way through campus and part of the path goes through this narrow strip that’s basically an alley behind a building. Traffic on this path goes in both directions.
You can probably see where this is going. As I was traveling along this path, I ended up looking down at my phone and found myself veering into the other lane. Another biker came around the corner and I rode into him headfirst, toppling both of us off our bikes. The incident was definitely a learning experience to not mess around with your phone when you’re on a moving bike.
Thankfully, neither of us was injured. Unfortunately, the crash did cause damage to the guy’s front wheel. My bike remained unharmed – and even if it was damaged, it wouldn’t have mattered because I was on a bike share bike. They handle the bike maintenance, not me – another reason why bike share systems are awesome.
It’s taken me a while to write about this incident because, frankly, it’s embarrassing. But as I look back on it, I realize there’s something that I can share here. After making sure we were all okay, I told the guy to go get his bike fixed and send me the bill. He didn’t expect it would be super expensive – only part of the bike was messed up. Still, it was a costly mistake. The repairs ending up costing around $190. He had a pretty fancy bike that required a special part.
Luckily for me, I’ve had money that I’ve been setting aside for the past couple of years to handle situations exactly like this. It’s my stupid mistakes fund. As a result, even though I wasn’t expecting it, I already had $190 set aside to cover this mistake.
My Stupid Mistakes Fund
I first learned about the stupid mistakes fund from Ramit Sethi, way, way back in the day (I think I must’ve been in college or just out of college when I first learned about it). A link to his post explaining the stupid mistakes fund can be found here.
Basically, the idea with the stupid mistakes fund is to save a small amount of money each month to cover “unexpected” – but really, when you think about it – expected mistakes. None of us is perfect, so we’re all going to make stupid mistakes in our life. It’s just a matter of when.
I use my stupid mistakes fund to cover these dumb things that I do. Think about all the times you’ve lost or broken something, or got a dumb ticket, or paid some stupid fee. These are all things that are perfect to cover with your stupid mistakes fund.
Since starting my stupid mistakes fund, I’ve only had to use it a few times. The last time I used it – before this bike accident – was on my honeymoon when I stupidly wiped my glasses using a cloth that had some sand on it. It ended up scratching the lens and bothered me so much that I needed to get the glasses replaced. That cost me $80, which was easily covered by the funds I had squirreled away from myself over the years.
Does it stink that I had to buy new glasses? Sure, but it stinks less when you’ve already saved for it.
Why Create A Stupid Mistakes Fund?
Most stupid mistakes won’t bankrupt you. For the most part, you’ll probably be able to cover it with your regular cash flow. But stupid mistakes have a way of messing with our goals. For most people, a stupid mistake happens, and then suddenly, they might find themselves a little bit behind on whatever they were trying to achieve that month. Then, before they know it, some more stupid mistakes happen, and the cycle continues. Life happens.
The nice thing about a stupid mistakes fund is that it gives you a little extra cushion. You won’t have to mess with your regular cash flow because you’ll already have money saved away for the situation. And if you don’t need the money, great! It means you’ve got cash on you now.
The opportunity cost of saving this money isn’t high either. We’re not saving thousands into our stupid mistakes fund. I save just a few hundred bucks a year – just enough to cover the few mistakes I make in a year. The cost of not investing that money isn’t high.
You Won’t Notice You’re Saving Small Amounts
The other advantage of a stupid mistakes fund is that it can be set up without you even noticing it. I save just $25 per month into my stupid mistakes fund. For most people, I’d recommend saving somewhere between $25 and $100 per month, depending on how much you want to save and how many mistakes you tend to make in a typical year.
$25 or $50 per month isn’t really that much money. Most of us spend more than that in a week just going out to eat lunch. If you just automatically save a few bucks a month, I promise that you won’t even notice it.
It’s Easy To Set Up Your Stupid Mistakes Fund
I set up my stupid mistakes fund using my Capital One 360 account. All I did was set up a sub-account labeled “Stupid Mistakes Fund” and then every month, Capital One automatically withdraws $25 from my checking account. I’ve been doing it for years without ever noticing the money leaving my bank account. You could do this with pretty much any online bank, but I prefer using Capital One 360 just because it lets me make sub-accounts really easily. You can easily set up your stupid mistakes fund in just 5 or 10 minutes.
There’s some comfort in knowing that I have a little money set aside to cover these type of dumb mistakes. It takes no time to set up and it’s a nice way to make sure that I don’t ever fall behind in a month.
You’re going to make stupid mistakes – that’s a guarantee. You might as well pay yourself a little money each month so that you can cover those stupid mistakes when they happen.
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Check out these other ebikes and scooters I've reviewed:
- Urban Arrow Ebike – Last year, I made one of the largest purchases I’ve ever made – I bought a $9,000 electric cargo bike from Urban Arrow. In my Urban Arrow review, I will discuss what it is and why I decided to buy this bike, as well as discuss how impactful a bike like this can be on your journey to financial independence.
- Troxus Explorer Step-Thru Ebike – The Troxus Explorer Step-Thru is a fat-tire ebike that I’ve had the pleasure of riding for a while now. It has amazing power, great looks, and awesome range. If you’re looking for a great fat-tire ebike that offers a lot for the price, the Troxus Explorer Step-Thru is definitely one for you to consider. Check out my Troxus Explorer Step-Thru Review.
- Hovsco HovBeta Ebike – The HovBeta is a folding ebike with great specs and a lot of interesting features, and importantly, it’s sold at a good price point. I’ve had a blast commuting with it and using it to do deliveries with DoorDash, Uber Eats, and Grubhub. Check out my Hovsco HovBeta Ebike Review.
- Vanpowers Manidae Ebike – The Vanpowers Manidae is a fat tire ebike that I’ve been riding as my primary winter commuting bike and have also been using it to do food delivery with apps like DoorDash, Uber Eats, and Grubhub. After clocking in a decent number of miles with this ebike, I wanted to write a post sharing what my experience with the Vanpowers Manidae ebike has been like. Check out my Vanpowers Manidae Review.
- Sohamo S3 Step-Thru Folding EBike Review – A Great Value Folding Ebike – The Sohamo S3 Step-Thru Folding Ebike is an entry-level folding ebike that offers a lot of value for the price point. I’ve been riding the Sohamo S3 for a while now, putting the bike through its paces, and I have to say, this bike has exceeded all of my expectations. Check out my Sohamo Review.
- KBO Flip Ebike – The KBO Flip is an excellent bike. I’ve had a great time riding it and think it’s a versatile bike that can be used for a lot of purposes and can fit a variety of lifestyles. It’s worked out great for me as a general commuter bike and as a food delivery bike. Check out my KBO Flip Review.
- Hiboy P7 Commuter Ebike – The Hiboy P7 is an excellent electric commuter bike that’s offered at an affordable price point. The range and speed of this bike are both very good, so you won’t have any trouble getting anywhere you need to go with it. As a food delivery vehicle, this is also good – with how much range it offers, you’ll be able to work all day on a single charge. Check out my Hiboy P7 Commuter Electric Bike Review.
- Himiway Escape Ebike – The Himiway Escape is an interesting bike for anyone looking for a moped-style ebike. If you’re a gig economy worker, the Himiway Escape is particularly interesting and it’s possible to think of it as an investment, especially if you can opt to do deliveries with the Himiway versus using a car. It’s not cheap, but you can definitely make your money back when you compare the mileage you’ll put on your car versus using an ebike. Check out my Himiway Escape Bike Review.
- Espin Sport Ebike – The Espin Sport is a good ebike for someone who is looking for an ebike that feels and rides more like a regular bike. There are many ebikes that are really only bikes in name. In reality, they’re basically electric mopeds. The Espin Sport, by contrast, is a bike you could probably ride without the battery and you’d feel like you’re just riding a regular bike. Check out my Espin Sport Review.
- Varla Eagle One Scooter – The Varla Eagle One is an excellent scooter that can make sense for a lot of people. It can work as a primary mode of transportation. You can use it to work on gig economy apps like DoorDash, Uber Eats, and Grubhub. And it can also be a recreational vehicle if you’d prefer to use it for that. Check out my Varla Eagle One Review.
- Varla Falcon Scooter – The Varla Falcon is an excellent scooter that offers a good amount of power at a lower price point compared to more powerful scooters. It’s not exactly an entry-level scooter, nor is it a high-powered scooter. I think it fits somewhere in-between those two categories – an intermediate scooter if I had to give it a category. Check out my Varla Falcon Review.
- Hiboy S2 Scooter – The Hiboy S2 is an excellent entry-level commuter scooter that's perfect for someone looking to save some money in transportation costs and improve their commute. Check out my Hiboy S2 Review.
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- Fucare H3 Scooter – The Fucare H3 is a fun scooter and I’ve enjoyed testing it out. For a daily commuter or quick trips or errands, the Fucare H3 is probably the scooter I’ll use. It’s portable and easy to maneuver, so it’s just easier to take on the road when I need it. Check out my Fucare H3 Scooter Review.
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Kevin is an attorney and the blogger behind Financial Panther, a blog about personal finance, travel hacking, and side hustling using the gig economy. He paid off $87,000 worth of student loans in just 2.5 years by choosing not to live like a big shot lawyer.
Kevin is passionate about earning money using the gig economy and you can see all the ways he makes extra income every month in his side hustle reports.
Kevin is also big on using the latest fintech apps to improve his finances. Some of Kevin's favorite fintech apps include:
- SoFi Money. A really good checking account with absolutely no fees. You'll get a $25 referral bonus if you open a SoFi Money account with a referral link, and an additional $300 if you complete a direct deposit.
- 5% Savings Accounts. I'm currently getting 5.24% interest on my savings through a company called Raisin. Opening a Raisin account takes minutes to complete, it's free, and all of your funds are FDIC-insured. I explain how it works, why I'm now using it to store my emergency fund and any other cash savings I have, and why I recommend everyone check it out in this review.
- US Bank Business. US Bank is currently offering new business customers a $900 signup bonus after opening a new account and meeting certain requirements.
- M1 Finance. This is a great robo-advisor that has no fees and allows you to create a customized portfolio based on your risk tolerance. You also get $100 for opening an account.
- Empower. One of best free apps you can use to monitor your portfolio and track your net worth. This is one of the apps I use to track my financial accounts.
Feel free to send Kevin a message here.
Will you stop making contributions to your stupid mistakes fund once it has reached a certain threshold—so you can increase your investment contributions?
At the end of each year, I pull out any excess funds and use them for other stuff. I do that with my other short term goals as well.
i’d be interested a recommend article on best/easiest banks (or apps) for use with sub-accounts. Highlighting features you’ve found benifitial would be advantageous as well. – ( (planning to put your suggested savings goal/practices to use after locating a service I am pleased with.)
-appreciatively, R
Best bank for sub accounts is definitely Ally bank. Discover is also good. Capital One 360 used to be my go-to one, but they changed their app now and it’s crappier than it was before, so I’ve actually recently switched over to using Ally as my primary sub-savings account bank.
You’re a panther–didn’t you land on your feet?
Landed on my back, unfortunately!
I have one of those. I call it the “Oh crap” account. It takes $10/week and puts it towards things like parking tickets (rare, but expensive!), replacing my cell phone screen, etc. It allows me to move on more quickly from the stupid mistakes instead of dwelling on them. I used to fixate on a parking ticket and now I grit my teeth and pay it faster–which avoids fees!
That’s terrific! And it’s nice having that little buffer. 10 bucks a week is so little no one will notice if being squirreled away. It’s perfect to cover those stupid mistakes.
Awesome post!
Man, I wish I’d known about this a long time ago. I’m currently paying what Dave Ramsey calls a “Stupid Tax.”
Sharing this one, for shore!
Thank Shin! I’ve definitely paid plenty of stupid tax over the years.
I prefer “stupid mistakes fund” sooo much more than “emergency.”
Enjoyed it FP 🙂
Thanks Pete!
Glad you both are ok! In addition to your stupid mistakes fund, do you also have an emergency fund? If so, why don’t you use that instead?
I do have an emergency fund, but I like to stick to real emergencies for that. My stupid mistakes fund is more for the little things that happen in life.
Same as emergency fund? But I like it more as stupid mistakes fund!
I classify that into my emergency fund as well. I recently had a stupid mistake problem where I ended up spending $435 on something that I didn’t even need to actually spend it on. Poof! It’s gone! :\
Ouch!
Whoops! Those MN trails are awesome but can be busy and dangerous sometimes. Glad everyone came out unscathed.
I kind of like this idea, though I feel like I would stop contributing to it once it got to a certain size. At some point I’d rather have my money doing something else. Like, after I have $500, just keep it there.
Still, an interesting concept 🙂 Thanks for sharing!
Thanks Dave. Yeah, depending on how much you save into the fund, take out the extra and use it for something else. Ramit Sethi says that too – he saves $100 a month into it, then takes out the extra at the end of the year for whatever he wants. Since I’m saving pretty little into it, it never gets too big.
This is such a great idea! There are so many little “oops” moments that can lead to some expensive consequences. A Stupid Mistakes Fund would certainly come in handy!
The nice thing is that your stupid mistakes hopefully shouldn’t be too expensive. Easy enough to just set aside a tiny amount each month that most of us won’t even notice.
Stupid mistake fund is actually an excellent idea, which we never thought of.
Usually our regular cash flow is able to handle any stupid mistake, which (touch wood!) does not happen too often.
But to some people, it can have a significant impact on their finances.
Our closest equivalent to stupid mistake fund is car maintenance fund, as over the years, our average expenses on auto maintenance comes to around $500 a year.
That $500 per year is something that’s easily taken care of if you divide it out over 12 months – then it pretty much seems like nothing. I’d think that’s more of an expected expense though. I tend to use my stupid mistakes fund for things that are really just stupid things I did.