I am trying to track our expenses and make a budget for the first time ever. To do this, I am going back through the last 12 months of credit card statements and checks and attempting to categorize our expenses. However, I am having problems figuring out how to categorize many items. It seems like many items can go into one or more category. The key, here, it seems to me, is to make a choice and be consistent about it. But I'm not even sure about the broader choice of categories.
Some examples:
We eat out a lot. Sometimes we eat out at home and sometimes we do this on trips. Should the eating out on trips be categorized with "vacation" or "eating out?" If we didn't travel so much, I'd be tempted to categorize the eating out on trip with "vacation." But we do, so it will look like we spend incredibly much on vacation but not very much on food since all the food on vacation will be excluded from the food budget. However, if we categorize this eating out as "eating out," it will look like we don't spend that much on vacation -- but that's of course one of the reasons why we are eating out in the first place.
If we decide to include the food on vacation as "eating out," since I could bring my own food on at least some vacations (this is not permitted overseas), do we include drastic attempts to minimize cost for meals (i.e. buying nuts and fruit at a store instead of eating at a restaurant) as "groceries" instead of "eating out?" I would think yes.
We like to bird. It is our primary hobby and it can be expensive. So, should all the travel that is primarily birding simply be categorized here and separated out from family visits? How about if the trip is partly both?
Let's say I gave my husband an expensive lens which I knew for a fact he wanted for bird photography as a present. Do I count this under the "gifts" category or the "birding" category?
I have a category for entertainment which includes things like: "Books, Music, Magazine subscriptions, Movies, Theater, Museums ..." However, my husband spends a lot of money on professional subscriptions. So, we have subscriptions that are not entertainment. It seems like his subscriptions need to be in a special category, but this seems overall fine-tuned. Or maybe I could just make up a non-reiumbursed professional expense category and stick it in there?