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.
More Recommended Ebike/Scooters
Check out these other ebikes/scooters I've had the chance to do a review for:
- GEN3 Outcross Bike – The GEN3 Outcross is a solid, affordable fat tire ebike that does a good job of doing what I need it to do. It works great for city riding, giving me a smooth ride in all conditions. It’s works really well as a winter ebike since the fat tires give it good traction over snow and ice. Check out my GEN3 Outcross Review.
- Himiway Escape Bike – 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 Bike – 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.
- 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.
More Recommended Investing App Bonuses
For additional investing app bonuses, be sure to check out the ones below:
- M1 Finance ($10) – 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 $10 for opening an account. Check out my M1 Finance Referral Bonus – Step-By-Step Guide.
- SoFi Invest ($25) – SoFi Invest is an easy brokerage account bonus that you can earn with just a few minutes of work. Use my SoFi Invest referral link, fund your SoFi Invest brokerage account with $100 and you’ll get $25 of free stock. I also have a step-by-step guide for the SoFi Invest referral bonus.
- Moomoo (5 free stocks) – Moomoo is a free investing app currently offering 5 free stocks (usually worth around $75-$100) if you open an account using a referral link and deposit $2,000. Read my Moomoo referral bonus guide for more information.
- Webull (5 free stocks) – Webull also gives you 5 free stock valued between $3-$3,000 each if you open an account using my referral link. Here’s a guide I wrote about how to earn your free stocks using Webull.
- Robinhood (1 free stock) – Robinhood gives you a free stock valued between $2.50-$225 if you open an account using my referral link.
- Public (1 free stock) - Public gives you a free stock valued between $3-$70 if you open an account using my referral link.
More Recommended Bank Account Bonuses
If you’re looking for more easy bank bonuses, check out the below options. These bonuses are all easy to earn and have no fees or minimum balance requirements to worry about.
- Chime ($100) - Chime is a free bank account that offers a referral bonus if you use a referral link and complete a direct deposit of $200 or more. In practice, any ACH transfer into this account triggers the bonus. This bonus is easy to earn and posts instantly, so you’ll know if you met the requirements as soon as you move money into the account. I wrote a step-by-step guide on how to earn your Chime referral bonus that I recommend you check out.
- Digital Federal Credit Union ($100) – Digital Federal Credit Union (DCU) is a free, nationwide credit union that I recommend to readers for two reasons. First, DCU has a $100 referral bonus if you open a free DCU checking account with a referral link. Second, DCU has a saving account that gives you 6.17% interest on your first $1,000. Check out my in-depth post on how to set this account up.
- Upgrade ($100) – Upgrade is a free checking account that’s currently offering a $100 referral bonus if you open an account and complete three debit card transactions. These bonus terms are easy to meet, so it’s well worth doing this bonus as soon as you can. Importantly, this bonus says that it’s now scheduled to end on January 31, 2023. As long as you get your account opened before January 31st, you should be eligible. Here’s a post I wrote with more details: Upgrade $100 Referral Bonus – Step By Step Directions.
- SoFi Money ($275) – SoFi Money is a free checking account from SoFi. They’re currently offering a $25 referral bonus if you open a SoFi account with a referral link and deposit $10. You can also make an additional $250 as well if you complete a direct deposit. This is a good bank that is also 100% free, so you won’t have to worry about managing this account. Here’s a post I wrote with instructions on how to earn your SoFi Money bonus: SoFi Money Referral Bonus: Step By Step Guide.
- Current ($50) – Current is a free fintech bank that’s offering new users a $50 referral bonus after signing up for an account using a referral link.Current is an easy bonus to earn and also gives you access to three savings accounts that pay you 4% interest on up to $2,000. That means you can put away up to $6,000 earning 4% interest. That’s very good and makes Current an account I recommend to everyone. Check out my step-by-step guide on how to earn your Current Bank bonus.
- Fairwinds Credit Union ($100) – Fairwinds Credit Union is offering a referral bonus for users that sign up using a referral link. Fairwinds has no fees or minimum balance, so this is a particularly easy bonus to earn. Since this is a smaller credit union, my gut instinct tells me this offer won’t be around long, so if you’re in a position to meet the bonus requirements, grab this bonus before it’s gone. Here is my step-by-step guide on how to earn your Fairwinds Credit Union bonus.
- OnJuno ($60) – OnJuno is a fintech/neobank that is currently offering a $10 referral bonus if you open an account using a referral link and make a deposit of $50 or more. You will also get 1000 JCOIN. The 1000 of JCOIN is cryptocurrency. At the time I'm writing this, it'll be worth about $50. Check out my OnJuno referral bonus guide here.
- Varo ($30) – Varo is a free fintech banking app similar to Chime or Current. It’s currently offering a $30 bonus to new users that open a new Varo account with a referral link. The bonus for this bank is very easy to meet, all you need to do is spend $20 within 30 days of opening your Varo account. Check out my step-by-step guide to learn how to earn this bonus.
- Novo Bank ($40) - Novo bank is a free business checking account that’s currently offering a $40 bonus if you open a Novo business checking account using a referral link. In addition to being a good bank bonus, Novo is also a good business checking account. It has no monthly fees or minimum balance requirements and operates a good app and website. Indeed, it’s the business checking account I currently use for this blog. Check out my post on how to easily open a Novo account.
- Albert ($150) – If you can manage to do a real direct deposit, Albert is an easy account you can use to earn a referral bonus. Here’s a review about Albert I wrote. And here’s a step-by-step guide on how to earn your Albert referral bonus.
- Netspend ($20 + 5% Interest Savings Account) – Netspend is a company that provides 5% interest savings accounts. If you sign up using my referral link, you’ll get a $20 signup bonus once you make your first deposit into your Netspend account of $40 or more. That means you get a 5% interest savings account and a free $20 to start! Make sure to check out my in-depth guide on how to set up these accounts.
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 $250 if you complete a direct deposit.
- DCU. Digital Federal Credit Union (DCU) is a free, nationwide credit union that I recommend to readers for two reasons. First, DCU has a $100 referral bonus if you open a free DCU checking account with a referral link. Second, DCU has a savings account that gives you 6.17% interest on your first $1,000.
- Novo Bank. Novo bank is a free business checking account that’s currently offering a $40 bonus if you open a Novo business checking account using a referral link. It’s the business checking account I currently use for this blog.
- 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 $10 for opening an account.
- Personal Capital. 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.
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.
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.
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.
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!
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.
I prefer “stupid mistakes fund” sooo much more than “emergency.”
Enjoyed it FP 🙂
Thanks Pete!
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 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.
You’re a panther–didn’t you land on your feet?
Landed on my back, unfortunately!
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.
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.