How Many Spending Categories?

[rjbf65]

How many different spending categories do you keep track of?  I feel I have too many at times and at other times I feel I don't have enough.  I also struggle with how to categorize cash I get out for spending.  Sometimes it's food, sometimes its giving, sometimes entertainment.

I've been using mint for a few years and this year is my first year of transferring that info to a spreadsheet each month.  We are projected to spend around $48K-$50K overall for just living expenses.  ($4,500) of that is for masters tuition and $3,400 is student loan payments.  So ideally our living expenses would go down once those are done but I feel like its likely that something else would take its place.  Coincidentally, we are on track to invest about $48K this year before any matching is factored in. This has been eye opening to project out months in advance.   

I'm including everything that is paid for from our checking account such as auto, home, and life insurance, property taxes, food, entertainment etc.  My spreadsheet has around 30 categories.  Several of the items are only once or twice per year but it still seems like a lot more than necessary.  I throw a lot of items into the "shopping" category when it's likely for something else.  I do think its useful having it broken out as to see where it's possible to optimize.  But at times I'm not specific enough where the money truly goes as in my cash spending.  How many categories do you all out there have?       

[OurTown]

As many or as few as works for you.

For example, you could divide your take home between necessary and discretionary, then perhaps subdivide "necessary" into fixed and variable.  That's only three categories.  Necessary-fixed is always the same, obviously.  This would be line items like mortgage payments.  Necessary-variable would include things like utilities, gas, and groceries.  You would need to budget enough for your highest historical month.  The remainder would be discretionary.  How much of your discretionary you spend vs. save is up to you, which is why they call it "discretionary."

[lamil]

Monthly bills (mortgage, electric, gas, etc)
Daily spending: Groceries, Fuel, Household, Restaurants/Entertainment, SpendingMoney
Savings: Create categories here for savings goals; move money to above categories when spending actually happens and track there instead. Delete/create savings categories as needed. (car insurance, investment funds, emergency fund, vacation, etc)

Add notes to the transactions for any specifics I want to be able to look at later. (gas price, spendingMoney item details, etc)

Most of my random purchases go into my spendingMoney category with their own details, including any cash that I take out as a single transaction.  Because the cash withdraw is now recorded, I wouldn't track how I spend that cash because its already been accounted for in my budget. (I may add details in the atm transaction if i know specifics at that time)

Post-spending analysis works out fine this way for me as I can sort by category, or by payee specifically as that is also recorded on each transaction.


To answer the number question: 9 monthly, 5 daily, 9 savings goals currently.

[BlueHouse]

For years, I had so many (too many...maybe 50) categories in my budget.  It made it so I couldn't see the forest for the trees.  I knew exactly what I spent on the most minor things, but couldn't tell you whether I had a spending problem or not. 
So I cut it down...way down.  Now I have about 12 and that seems to be a good amount for me. 

[dreams_and_discoveries]

I agree it's really trial and error on what works for you, i have two levels of categories, such as Home, which then has all the bills below it; Food & Drinks, which has groceries, eating and drinking out below it etc - but I only adopted this approach as the app I use has this structure.

The main aim in my opinion, is to be able to split out the essentials, the luxuries and any frittered away money.

[VoteCthulu]

It looks like I have 15 right now, but I just add more when I need them. I could combine some, but right now I like seeing things like my phone and alcohol separately.

Gas and car maintenance
Internet, cable, Netflix
Phone
Gas, electric, water, sewer
Entertainment (movies, etc.)
Alcohol
Restaurants
Groceries
Insurance
Lawn care
Cloths
Taxes
Savings
Mortgage
Less than annual expenses  (new appliances, etc.)

[StarBright]

We do three with our take home pay:
1. Fixed - this is everything that is set up for monthly autopay/stays almost the same across the year, so mortgage, utilities, netflix, pre-planned charity, daycare, insurances etc.
2. Savings - kids college, Roths, post-tax investments, etc.
3. Flexible - everything else
     3a. - Food spending, restaurant, groceries, occasional coffee or ice cream treats.
     3b. - Life - this really is everything else. Haircuts, entertainment, kid stuff, house stuff, gas for car, reactive charitable giving and anything else you can think of.

The fixed and savings are within $20 every month. Some months flexible all goes to reactive stuff like replacing the leaf blower in October or hiring a last minute babysitter. Some months we have more room for fun.

[Raenia]

I have 12 categories, including misc.  I may combine a few of them, but I'm pretty happy with that number.  Everyone has a different tolerance for level of detail, so you'll have to work out what works for you.

[diapasoun]

I'll be an odd loner out here -- I also have 30 categories (including savings and investments), which I divide into four groups in my spreadsheet: monthly necessities, irregular necessities (vet bills, car insurance, etc), monthly discretionaries (e.g. going out), and irregular discretionaries (e.g. haircuts). I find the divisions helpful; for example, if I just had a big "fun stuff" category I might be thinking my problem is randomly buying stuff, whereas when I divide out books I see how much of a problem books in particular are for me.

I do find that I also like looking at Mint's trending categories, which are much broader -- it helps to see how much I spend on food in total, on miscellaneous fun stuff in total, and so on, as well. Doing that definitely prompted me to spend less on going out, because my food bills in total were too high and the easiest way to drop them was cooking more!

One thing that makes all this easier, though, is that I don't spend a lot in cash -- most everything I do is electronic -- and so that's easier to handle in terms of being able to tie money to spending. When I was living heavily cash-only, though, I put money in category-defined envelopes and tracked it via the envelope. Would that make it easier for you on your tracking?

[solon]

In the directions for a Case Study, it says your Misc category should be about 4% of your total spending. This makes a lot of sense to me. If it's more than 4%, you're not getting enough detail out of your tracking. If it's less than 4%, you're spending too much time tracking.

[omachi]

A full 24 categories, though not all of them have any movement other than their monthly allocation being dumped into them each month. I started with fewer categories, but made some new ones when it looked like it made sense. For example, what used to just be the cars budget has been broken out into three new ones - 1) saving for the next car, 2) gas and other regular expenses, and 3) registration, insurance, and unexpected repairs.

The saving for the next car came out first, because it was just obscuring everything else. Then the next split happened because I was building up too much for unexpected repairs and that made it tough to see if the other spending was in line with expectations. Having the repairs in with a couple other known quantities has allowed me to trim that budget a couple times as it became clear there was too much in there.

So my basic suggestion is to start simple, and make changes when something gets in the way of letting you see what you want to measure. But to me, a "shopping" category is entirely too vague. What are you shopping for? Do you have a spending habit on one particular thing that's unseen because there's a convenient catch-all category to hide it in? How would you know?

[MrsPB]

I just counted and it’s a shocking 44!!! But I have been thinking lately about condensing them. For example I have a category heading for clothing but then there are subcategories for each household member. Same thing for gas for me and my husband with separate categories, plus separate categories for each insurance (car, home, life, disability, pet). For 2018 I’m going to redo my category list and merge some areas now that our spending has been fairly consistent for a few years. It will make it harder to compare apples with apples though but I can instead adjust payee name in YNAB to reflect more detail without having to go into each transaction , I.e. for clothing, instead of naming the store as payee, I could name the family member for ease of filtering if needed.

[MrsPB]

In the directions for a Case Study, it says your Misc category should be about 4% of your total spending. This makes a lot of sense to me. If it's more than 4%, you're not getting enough detail out of your tracking. If it's less than 4%, you're spending too much time tracking.

Interesting! I have not seen that but just checked mine and it was at 3% so, yeah, I really need to reduce my categories!

[middo]

I have ten:

Food (groceries)
Non-food groceries (eg. Washing powder)
Eating out (includes alcohol)
Medical
Kids (for clothes and school stuff)
Mortgage
Home utilities
Transport
Home maintenance
Hobbies/holidays.

So far everything seems to fit into one group or another for tracking.  I use "track my spend" app from the Australian Government to track it all as most of our purchases are cash. If I have to hand over cash I think about it a bit more than card.

YMMV.

[Retire-Canada]

How many different spending categories do you keep track of?

I have one category and that is "savings". From that data I can compute "spending" and that's all I am really worried about so I don't delve any deeper.

[Megma]

Hm..I have 22. That seems like a lot, I’d have guessed 10-12 but I think that’s because many auto-populate like mortgage and car insurance. I also have a few for our rental property like it’s mortgage is separate as it’s income stream.

[rpr]

We have the following categories that we track to see any trends.

Home -- includes mortgage, utilities, yard work etc.
Groceries -- includes food + other consumables
Eating out -- dinner dates once a week + lunch out twice a week
Medical -- co-pays mainly (health insurance premiums deducted via payroll)
Auto -- gas, maintenance etc.
Pets 
Sinking funds -- for annual bills such as life insurance, etc.
Entertainment -- performances, concerts, movies
Misc -- includes discretionary shopping
Charitable contributions
Travel/Vacations

[SC93]

If you are looking for a great budget planner try everydollar. It's free. There is an app for it. Really easy to use.

[rjbf65]

A full 24 categories, though not all of them have any movement other than their monthly allocation being dumped into them each month. I started with fewer categories, but made some new ones when it looked like it made sense. For example, what used to just be the cars budget has been broken out into three new ones - 1) saving for the next car, 2) gas and other regular expenses, and 3) registration, insurance, and unexpected repairs.

The saving for the next car came out first, because it was just obscuring everything else. Then the next split happened because I was building up too much for unexpected repairs and that made it tough to see if the other spending was in line with expectations. Having the repairs in with a couple other known quantities has allowed me to trim that budget a couple times as it became clear there was too much in there.

So my basic suggestion is to start simple, and make changes when something gets in the way of letting you see what you want to measure. But to me, a "shopping" category is entirely too vague. What are you shopping for? Do you have a spending habit on one particular thing that's unseen because there's a convenient catch-all category to hide it in? How would you know?

It's definitely too vague.  Pretty much everything we get from Amazon I throw into the "shopping" category.  When often times it's for normal necessities.  I do the same when I see Walmart as the merchant.  Likely a good portion of that would be for food. 

[rpr]

It's definitely too vague.  Pretty much everything we get from Amazon I throw into the "shopping" category.  When often times it's for normal necessities.  I do the same when I see Walmart as the merchant.  Likely a good portion of that would be for food.

I use mint.com's split capability as soon as the purchase shows up. This is easy as you have the electronic receipt. Other stores like Target etc have to be split into multiple categories if needed.

[Monkey Uncle]

My spreadsheet has the following columns: date, vendor, type, category, subcategory, item, and amount. 

"Type" is binary - either recurring or discretionary.

"Recurring" contains eight categories, and "discretionary" contains 15 categories.

I haven't bothered to count the number of subcategories - suffice it to say I have quite a few.  And then of course the "item" field gets all the way down to the individual purchase level.

I keep a pivot table that displays type, category, subcategory, item, and amount.  At a glance I can drill down to as much or as little detail as I like.  I mostly pay attention to the "category" level because that is where the most useful information seems to be, but I like being able to know exactly how much I've spent on collard greens this year, just in case the need arises to micromanage that particular item.

I figure I'm going to have to spend the time to enter each individual purchase anyway, so it really isn't much extra work to put in all the detail down to the item level.

[soccerluvof4]

I use mint. Have the categories and then put in notes if off the cuff. I have found these to work well for us. Not having a mortgage or car payment helps as well.

Auto fuel and Maintenance-   Pretty self explanatory. Everything from fuel to maintenance costs i cant do

Cell phones

Cable/Netflix

Utilities- This includes all and water

Food and Household-  Again anything that is consumed or used to clean house etc...

Christmas/Birthday- Basically presents etc...

Gym membership

Medical/Dental Expenses- Anything we obviously have to pay

Home Maintenance

Home and Auto Insurance- We take the total for the year and divide and enter over the 12 months

Education and Clothing- Anything we have to pay for kids from field trips to shoes

Entertainment/Misc.  Stop at dollar store for snacks, go to a movie or out to dinner etc..

Soccer- All 4 of our kids play soccer so anything from fee's to uniforms, travel costs, basically everything if attending or heading to soccer.


Pretty much dissects enough for us everything and the bottom line is to just try to meet or come under our monthly Fire'd withdrawal amount.

[OurTown]

If you are looking for a great budget planner try everydollar. It's free. There is an app for it. Really easy to use.

It's a Dave Ramsey product.  But I like it anyway.

[rjbf65]

What my system has been for a while has been to look at the prior months net amount of dollars that were left over and then apply that money to whatever goal I had at that time.  Mint makes it really easy to know exactly what that number is.  Always have had a 15% minimum amount go towards retirement savings but then all extra would go to our mortgage.  Now that the mortgage is gone I have set our tax advantaged accounts to max out.  Then whatever is left over I put towards after tax investments. 

I don't do any type of sinking fund.  Basically I call $10K our buffer zone in our checking account.  Some bills show up once or twice a year and they get paid that month.  So some months it's possible to spend more than what our monthly paychecks are.  If that happens then the next month I let that account replenish up to the $10K level again.  It seems to work well for us. 

[rjbf65]

If you are looking for a great budget planner try everydollar. It's free. There is an app for it. Really easy to use.

It's a Dave Ramsey product.  But I like it anyway.

I like Dave.  His baby step program does work.  I still abide by some of his principals but the savings have become a lot more aggressive since discovering MMM.   

[LadyDividend]

Personally I only keep track of four- fixed, variable, savings and allowance. Under fixed I include my rent and fixed monthly bills. Variable includes fluctuating costs such as utilities. My personal allowance is $100 a week and I can spend it on whatever. And most of the money goes to savings, where it is siphoned off into various accounts.

In my experience simpler is better!

[FiguringItOut]

I use old version of YNAB.  It's been a life changing experience for me.  Quicken, Mind, GnuCash, excel, something else that I've tried to use for budgeting did not work, until I found YNAB.

As for categories, you keep track of as many as you need. 

I have about 40, but about 15 of them I keep hidden from view.  The hidden categories are either an infrequently used (vacation for example) or where I accumulate balance for future use (for ex. kid's summer camp category gets funded $150/mo for 9 months, until I need it to pay for summer camp).  I don't need to see this category every time I look at the budget, but once I budget $150/mo to it for the next 9 months, I can hide it and every month, from my available cash $150 will be diverted to this category).  I believe new YNAB (paid web version) has an option to stop per category savings based on the number of months or a total amount saved, I am doing this manually in the old version.  If I check a category and it doesn't have enough, I keep saving, if it has too much, I can keep it there to give boost to next year's camp, or reassign it to a different category.

I have very general categories like Household, but as the same time I have very small and specific categories like Haircuts. 

I've been using YNAB since 2011 and I've worked out what works best for me and allows me to keep track of things that are important to me.  Also, I figured out that some of the categories can be lumped together while others I need to separate because things get lost in the shuffle.  Also, I keep a bunch separate categories to keep track of kid related expenses since my exH reimburses me 50% of these and he wants to see everything separated, so it's easier for me just keep track of these separate.

I have separate categories for
Monthly
Rent, Cell Phone, Internet, Electric, Heating Gas, Netflix, Student Loan payment
Daily/General
--Groceries (food items bought for eating or preparation at home),
--Transportation (occasional taxi/uber, train tickets not covered by my work transit card, car rental not for vacation purposes, parking fee and road/bridge tolls when renting a car)
--Household (cleaning supplies, anything for the kitchen like dishes, new pot, table cloths, etc, also would include towels and sheets, new blanket, and most other household items except some one off large household purchases like new couch)
--Bathroom (soaps, shampoos, TP, feminine products, etc) 
Household and Bathroom are two separate categories and are also separate from Groceries (this took a while to figure out, but when it was initially all one large category but that only cause a lot of stress seeing one large expense amount each month and not have a clear picture of what's in there.
Note: keeping Household and Bathroom items separate allowed me to see where I was overspending.  I still overspend in those two, but it allows for a quick look to see what was purchased and where I can cut back.
--Eating Out (any prepared food eaten at home like takeouts or outside of home like restaurants, breakfast on the go, etc),
--Entertainment (movies, events, shows, exhibits, etc)
--Allowance for Kid1
--Allowance for Kid2  (I keep these separate as well as kids sometimes borrow $ either from me or from themselves and this allows both for me and for them individually to see where they each stand)
--Haircuts - don't even ask why this is separate, but it is and it works.
Medical
Over the counter
My co-pays/deductible
Kids co-pays/deductibles
I need to keep track of kids' related medical costs for reimbursements from my exH of his 50% share.
Clothing
Me
Kid1
Kid2
Also separate to keep track of what each kid has and needs in near future.
School
School supplies
School trips/fees
Test prep class
Test fees
School trips
Also also separate for exH reimbursement purposes.  A lot of these could probably be combined, but he wants to see everything separate
Savings
IRA
HSA
Other Savings
Summer camp
Gifts
there is something else here, but it's hidden and I can't see it on my phone
Travel
General travel - travel related expenses that are no actual travel (like passport fee renewal for example)
Then I create a separate category for each trip I'm planning and fund that particular trip.  Then I traveling I put all expenses into that category, so I can see how I'm doing against the budgeted/available amount. 
At the beginning, I used to then just move each separate trip expenses into a total vacation category, but overtime started leaving each trip as by itself.  This way I can go back and see how much I spend on 10 day trip to Europe summer of 2016, roadtrip to Canada fall 2016, or Europe summer 2017.
I also keep track in separate category all travel hacking cash rewards I get and use those exclusively for travel.  If I don't keep track of it, it will get lost in the shuffle.

I'm sure there are few more categories that I don't remember but since they are hidden and I can't see them right now.

I don't keep track of anything that gets deducted via payroll - medical premiums, transit costs, 401k, etc.  My budget for cash flow purposes only.
An excel spreadsheet keeps track of my total net worth with monthly balances in all cash and investment accounts.

I treat cash withdrawals from the bank as any other account.  When cash is spend, it becomes a purchase and gets recorded to a related category in the budget against  my Cash account ( the only thing I round these amounts to the next dollar so as to not keep track of change).  All lose change that I have gets deposited into a change jar at home.

I don't have Misc category. When I did, it became a catch all and didn't work.  Now, everything has it's place.  If something is truly Misc and doesn't have a place, I add it to Household with a Misc tag.  I can then search by tag and see how much Misc crap I have over a period of time.  And it's not a lot now ($30 over the last 4 months, whereas before, I would have over $100 each month lumped into Misc without any idea what is there).

[daverobev]

I'm keeping track of monthly spending this year, and I have three categories and two flags:

Household/Car/Disposable

Forever? Essential?

So I can see basically how much money life costs, how much I'm wasting. How much fat there is that could be trimmed, and how much less I'll be spending when certain expenses disappear (mortgage... except we'll probably buy a new house soon... but it's still not a 'forever' expense).

[sparkytheop]

I also use the old version of YNAB.  I started when I was facing a paycut, on top of trying to make sure I was setting enough aside to help my son with college, as well as to fund the building of a new house.

I have 34 categories that I keep track of.  Each bill is separated, plus I have sinking funds for things like house maintenance and car maintenance/tires/repairs.  I have a line item for quilting, but another for "fun money", which is where concert/play tickets get paid for, plus any little stuff I buy just for fun.

I recently added one I call "work", to cover things like internet, money for a retirement gift, little things like that.  I don't use it very often, but I didn't spend all my per diem on a recent trip, so I figured that would be a good place to put some of that overage.  I also added "work travel" so that all the eating out, souvenir shopping, and activities (mostly tours) I did wouldn't screw up my normal category.

[I'm a red panda]

  How many categories do you all out there have?       

One.  "Money spent", sort of- because we really don't even track that. We track money not spent.

At the end of the month we do a spreadsheet of how much is in each account we have.    My husband and I have always had a "don't spend much money and there will be enough" outlook, and there always has been. It's gotten way easier now that we make more than $30k combined.