How Much “Oh Crap” Money Do You Need?

Disclaimer: The statements made in this post are the opinion of the author. They should not be viewed as financial advice. Please consult with a financial specialist before making any financial decisions.
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I’ll be honest, as a low-income professional, it is extremely difficult to save a large amount of my income each month. With a couple kids at home, I’m lucky to save anything.

But I have managed to create a budget that should keep us living within our means while I ramp up my income with a side hustle.

That being said, life doesn’t always go according to plan and I’ve realized that sometimes I’m left holding the bag at the end of the month.

That is why I’ve started thinking about “Oh Crap” money.

Oh Crap, There Goes the Budget

Recently, my wife and I were out running some errands when my wife notices that one of our tires was basically fileted open. The wires were frayed and it was obvious that that tire wasn’t going to make our trip the next day.

Fortunately, I had been tracking my spending so I knew how much money we had left. We could afford new tires.

We went to Costco (have I mentioned that I love Costco?) and got in for our tire appointment.

Now the last time I had bought tires it had been for a small sedan. While my Kia Sportage is not a truck, the tires are significantly larger than the previous ones we bought.

The bill was nearly twice as high as I had originally anticipated.

Oh Crap!

With two more weeks left in the month, we would be scraping by.

Fortunately, I had “Oh Crap” money in the budget.

What is “Oh Crap” Money?

There are different ways to allocate your money that isn’t used for expenses or spending. A large chunk of that should be for saving and investing, another chunk—at least for a while—should be towards your emergency fund, and the last chunk should be your “Oh Crap” money.

“Oh Crap” money is funds that you have in your budget for when you inevitably say “Oh Crap” at some point during the month.

Maybe you or a child has to go to the doctor, or your microwave breaks, or your car needs to be repaired. Any of those things that seem to come up every month, but you can’t predict which one it will be this month.

Mine was tires this month, but last month was registering a vehicle and paying for a test (not my favorite way to spend money). Just those random things that always take their chunk out of your budget when you least expect it.

Any time an expense comes up and you think “Oh Crap”, that is “Oh Crap” money.

“Oh Crap” Money Vs An Emergency Fund

But, you might ask, isn’t that what an emergency fund is for? While I admit these two ideas are very similar, and can be connected, there are some important differences.

First, an emergency fund is a large lump sum of money you have in your bank account waiting for an emergency. “Oh Crap” money is a section of your budget to be dispensed every month.

Second, an emergency fund should only be used in dire need. An EMERGENCY. While you need tires, it really isn’t a huge emergency because there are financing options, you still have income coming in, and they are relatively inexpensive. The “Oh Crap” money will be used each month or allocated elsewhere.

Third, an emergency fund should be used for really large expenses (like your entire out of pocket maximum for a medical bill) or a chronic problem (like unemployment), and “Oh Crap” money is more for the minor annoyances.

To make it more clear, I’ll give some examples.

If you need to pay a forgotten bill, you will use that month’s “Oh Crap” money (because it is a small expense).

If your transmission goes out, you will use your emergency fund to replace your transmission or buy a new car (because it is a large expense).

If you make it through a whole month without an “Oh Crap” moment you can save that money, invest it, or spend it frivolously depending on your goals.

If you use your emergency fund to buy a new car, you can put your “Oh Crap” money towards replenishing your emergency fund until you are satisfied with it.

In other words, “Oh Crap” money is the dynamic money in your budget each month while an emergency fund is a static lump sum to be deployed when needed.

“Oh Crap” Money Vs Savings

Okay, you might be saying, but isn’t all of the extra money each month just going into savings, so isn’t that my “Oh Crap” money?

While your extra money should go into your savings (or investing) accounts this is not the same as your “Oh Crap” money for one big reason.

“Oh Crap” money is left over money that you hold onto to strategically use when and where you need it. Savings should come first.

In his great book, “The Richest Man in Bablyon”, George S. Clason says “A part of all I earn is mine to keep”. In other words, you should pay yourself first. Put some money into your savings account upfront before you do anything else and you will be well off very soon.

He recommends 10%, but start with what you can and go from there.

Your budget should look something like this and in this order (though your percentages will vary).

10% savings (and investing)

20% housing

10% utilities and bills

10% car

10% food

20% other

20% “Oh Crap” money

While your “Oh Crap” money can become savings if you don’t need it, it shouldn’t be lumped in with savings because they come on the opposite ends of the budget.

In other words, savings is money you pay yourself first and “Oh Crap” money is the end money that you try not to use but have on standby.

Calculating “Oh Crap” Money

So I’ve convinced you that you should start adding “Oh Crap” money into your budget each month. How do you know how much to allocate to “Oh Crap” money?

You’re “Oh Crap” money is easy to calculate. It should be equal to roughly the largest “Oh Crap” you’ve had in the past year.

Just go back over your credit card statements (or spending tracker) and find your largest unexpected purchase. That is how much you should probably put aside for “Oh Crap” money each month.

If that is too high, dial it down until you can barely afford to put it aside.

Remember your “Oh Crap” money is for your financial safety, so you don’t want to skimp on it.

How Much Oh Crap Money You Need

How much “Oh Crap” money you need depends a lot on your income and your budget.

For those on a meager budget maybe only $50 to $100 will be possible. In that case it is important to rollover your “Oh Crap” money from month to month because you’ll need it for those larger “Oh Crap” moments.

If you have a slightly larger budget, then maybe $500 to $1,000 is ideal. But much larger than $1,000 is probably in the realm of your emergency fund so don’t get too carried away with this.

If you’re regularly having “Oh Crap” moments that cost more than $1,000 it is probably time to consider the habits that are getting you there.

Avoiding “Oh Crap” Situations

It is impossible to avoid all “Oh Crap” situations, for example, you can’t plan on breaking a bone, but you can turn many “Oh Crap” situations into regular expenses.

The best way to do this is to brainstorm a list of unexpected expenses that have popped up in the past and start preparing for them now.

For my tires, I could have known that they needed to be replaced soon, but I hadn’t even bothered looking.

Anything that requires regular maintenance will become an “Oh Crap” moment if you don’t plan for it and take care of it in advance.

Go to your doctor regularly. Get your teeth cleaned. Get your oil changed and get a car health diagnostic run. Regularly service your computer. And so forth.

By moving items from the “Oh Crap” category to the regular spending category you free up more “Oh Crap” money for saving, investing, or just having fun.


“Oh Crap” money is mostly important for people that have low to moderate incomes who are trying to stay on the budget balance beam.

Once you’ve reached a certain level of income it will be easier to handle the unexpected.

So remember that saving, cutting expenses, AND increasing your income all go together to create your best financial situation.

What is an “Oh Crap” situation that you’ve handled? How much “Oh Crap” money do you think you need? Tell me about it in the comments below.

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