I think this depends on what the individual is looking for - if you deem it income and the refund happens, say, a month later, then you have more insight into cash flow perhaps. If the refund happens quickly (same week, or month as you look at reports for insight), then I do like to net it against the original expense category. I feel like this could go a few directions based on what’s important for you to see. Curious to hear others’ thoughts too!
For those who don't "over track" expenses but have a good system, care to share your Group/Categories?
I love seeing how others categorize their budgets! I’m very meticulous with mine, but I feel like I have a good balance (for me) between being so detailed that it’s a chore to split everything up and still having the information I need to make informed decisions about my spending. Which is ultimately the goal. I’m also a CPA, so my categories are pretty tax-focused.
One thing that I want to add is that it’s very helpful and insightful to break out your income if you earn a salary to reflect all of your payroll deductions (including income and payroll taxes, retirement contributions, health insurance, etc). Another big one for us is separate allowance accounts for each of us (and our kids earn an allowance as well).
Here are my basic categories (for perspective: spouse has W2 wages, I own my own business and we have 2 rental properties and 3 kids):
I’ve been trying to diversify away from Amazon a bit, and may add Target as a new category. I also want to break out grocery shopping by store. Once you start tracking it almost becomes a hobby!
Over time I have consolidated categories. For example, I used to separate groceries and dining out but some of the purchases fell into the gray area and I realized I just needed to know how much we spent on food.
Here’s what I am left with after doing this for 20 years!
Could you sort alphabetically by Group and repost?
I don’t think I over track but I’ll let you decide. Here are my categories:
- Car payment
- Utilities (my internet bill goes here as well)
- Cash spending (ATM)
- Coffee Shops
- Gifts & Donations
- Gear & Clothing
- Home Improvements - minor (e.g. Home Depot visit, lawn maintenance)
- Home Improvements - major (e.g. new furniture)
- Pets (for vet bills; pet food goes into either Misc or Groceries category)
- Personal Care (haircut etc)
- Personal Development (books, online courses, classes etc)
- Subscriptions (this includes TV for me)
- Transportation/Ride share (Uber, Lyft, bus)
- Events (concerts etc)
- Travel (mainly for plane tickets)
- Vacation (I throw every single purchase made while on vacation here)
Eating out (here I really wanted to have a good granular look at where money is going. Some people may find it way too much):
- Restaurants - casual date ($$ or $)
- Restaurants - fancy date (nice dinner at a $$$ restaurant)
- Restaurants - lunch
- Restaurants - networking and breakfast
- Restaurants - social gathering (your favorite uncle in town?!)
- Restaurants - weeknight meal (take-out for dinner etc.)
- Baby stuff
- Auto & Gas
- Auto Repairs
- Groceries - meal service
- Misc (Amazon, Walmart)
@Exo3 given your categorization granularity of food, wouldn’t it make sense to record foods purchased on vacation rather than considering it a vacation expense? Given that you would also be eating if you weren’t on vacation, not recording it as food hides the cost doesn’t it?
I have a very similar logic and workflow set up.
At the highest level, our Groups are:
- Bills (= your Regular Expenses) for recurring, regular cost expenses
- Living (= your Irregular Expenses) for baseline living that is variable but non-negitionable (i.e groceries)
- Discretionary (= your Discretionary) for all the things we could conceivably cut if dollars are getting tight
- Savings (= your Savings) for our savings goals.
Then we also break out groups that are technically discretionary but important to us:
- Gifting (many categories in this group)
- Connection (things like date night)
- Travel (many categories in this group that dynamically feed from a custom travel cost planner sheet)
We also have a number of personal businesses so we break those out in groups and and categories.
Once of the things that’s important to me is to keep track of the % of disposable income that we save. To that end, I have a sheet that tracks (Income) - (Bills) - (Living) = Disposable. Then I take (Savings) / (Disposable) to keep track of our household savings rate.
This is all organized around where and how we would make financial changes. In the short term, we can squeeze anything in discretionary (including gifting and the other discretionary breakouts). In the medium / longer term we can squeeze living and bills (i.e. move to a cheaper rental, change our phone service, change insurance).
It’s been working relatively well for us to gain clarity on the big picture buckets (=groups) and if we need to make a change, drill down to specific categories.
I have a “Streaming” category under an “Entertainment” group, a group that also contains things like dining out and social activities.
My Bills/Living/Discretionary definitions are the exact same. I never would have expected someone else to be thinking the same as me. Quite cool.
This is quite nice, thank you – snatching a bit for my own.
Always fun to pile on and compare notes like this.
My basic approach is to create groups around the high-level things I want to track, with some consideration of discretionary/non-discretionary. I’ve re-vamped this several times through the years and try to keep it as short and focused as possible. These also map fairly easily to various budgeting methods for occasional comparison analysis (e.g. 60% Solution, Balanced Money Formula, etc.). I’m mainly budgeting for myself; my partner and I each contribute to a shared budget which I keep separately (using many of the same Groups and Categories). My current Groups (alphabetically) are:
- Life & Health
- Personal & Children
Like others have noted, in each Group I create categories which I want to explicitly budget for (envelope style) or where I feel I need to monitor my spending (think about transparency or visibility, and what you really want to keep an eye on). Each category name starts with a Group prefix so I can easily identify which Group it is part of (i.e. in the Transactions list), and for easier sorting (see screen shot below). I found I would get confused which Group a category was in, so the prefix grounds me as I’m working through Transactions. I keep category changes to a minimum, and number things that are unlikely to change first. If there are too many categories in a group I consider breaking things out to another group.
What I often get from these kinds of reviews is that budgeting is very fluid and individual. Do what works best for you and if someone else’s idea sounds interesting plagiarize.
TL;DR, Here’s how I think about some of the groups and categories:
Some Entertainment items could be considered Utility-like (especially services). I view Utilities as non-discretionary where Entertainment is discretionary. For example, U.7 Mobile (cellular) is a Utility not Entertainment. E.1 Activities, Events, Hobbies is my catch all for going to movies, shows, household parties, and personal hobbies. E.2 Media, Services is for video, music, gaming and other “media” related subscriptions and services (think software and subscriptions, not hardware). E.3 Travel/Vacation gets all expenses for a trip or vacation. Each trip is unique enough that I don’t bother trying to project to the next one by analyzing the previous (e.g. camping vs. cruise).
For household non-food items from places like Target, Costco, etc. I use a general F.1 Groceries & Supplies and budget accordingly. If I get something like clothing, electronics, or patio furniture at Costco, that clearly is not household toiletries, dish soap, etc. and belongs in another category so I’ll split that out. For restaurants, if I’m paying a waiter’s tip for sit-down service on a special occasion (date night, birthday, family gathering), then that’s F.3 Dining Out (Special), though occasionally it could also be an E.1 Activities, Events, Hobbies expense (Bowling or Dave & Buster’s anyone?)
I don’t currently own a house, but I do break out Home expenses (the cost of having a place to live or as an asset) from Household (the costs to furnish it, clean the gutters, mow the lawn, buy tools, and I even toss pet care in this group for lack of a better place). My only “Miscellaneous” category lives in Household for when I can’t figure out where else to put a one-off expense. Hm.5 Improvements is for a new kitchen or roof, or any other items that add to or maintain the value of a home (think asset value for tax purposes). Light bulbs, consumables and other non-“fixture” items are H.1 Maintenance items.
Personal & Children gets a bunch of diverse categories. P.2 Personal Care includes things like gym memberships, spa, massage, haircuts. P.7 Reimbursable gets business reimbursable expenses or other things I expect to get paid back for. It is a placeholder category as I don’t ever budget money here.
In Savings, S.4 Down Payment could be for a house, car, or some other major purchase (I can keep track of those details elsewhere), and S.5 Education could be in Personal & Children, but has long term considerations such as 529 savings accounts so I decided to put it under Savings.
I decided to switch to “Transportation” instead of “Auto” or “Car” as a Group. I take a train to work, use Uber and Lyft occasionally, pay for electricity for my electric car, gas for my kids’ cars, parking fees, etc., and don’t need to see all those items broken down in my budget, so I use a generic T.1 Services & Consumables. I have T.5 Vehicle Purchase/Lease, which is the ongoing payment, vs S.4 Down Payment which would be saving up to buy.
For Utilities I want to easily track gas vs. electric (we currently have solar panels and an electric car), which is why I opted for Utilities as a Group with individual utility categories. I have a separate sheet to track and project each utility bill to help with budgeting. I mentioned a personal budget vs. a shared budget; some of my T.1 Services & Consumables is transferred to our shared U.1 Power category to pay the electricity for my car.
I budget on Gross income, and one issue I had to figure out is tracking payroll deductions. I have a payroll sheet that projects and breaks down each paycheck. Health insurance, HSA savings and company match, retirement contributions, commuter passes, even company meal plans, all pass through to a set of split transactions for each paycheck so those can be captured in my budget categories. Income and payroll taxes pass to a tax planning sheet so I can make sure my withholdings will align with my projected income taxes for the year. When I retire (eventually) all these expenses will be direct, so I felt it was important to get used to tracking and planning for them now.
I try to breakout Target/Amazon/Costco as much as possible. I used to just have this huge Amazon spend with no real insight. So I now break it out, for example a 150 bill might be 45 Bryson - Misc (diapers); 25 - Martini (pet food); 60 household; 30 groceries. I don’t get too specific calculating tax, etc. and just round to the closest dollar using the split transaction feature.
How do you categorize a “#1 - Less: qualified retirement contribution” and at the same time “Savings - Self-Employed Ret Contriubtion”? I’m trying to wrap my head around what makes sense. Are the Savings Goals an expense or income?
The #1 - Less Qualified Retirement Contribution is a payroll deduction item and the other one is for a business owner that makes retirement contributions to a SEP or SIMPLE plan.
Hi @hbwilliams22. My wife and I have taken the route of minimizing the categories as much as possible. With that, there are times where I still like to see the details expanded out so we heavily use tags. If you haven’t used tags before, I highly recommend them. They are great for chasing down things quickly to understand a transaction. Something I do to stay consistent with tags conventions is use data validation that references the tags report. That way, I am entering similar tags names as you would for your list of categories! I hope this helps!
Does anyone go ultra-minimal with categories? For example, just discretionary and non-discretionary as two categories of expenses?
I would like to become more minimal, or at least be able to view transactions by “fixed”, “variable”, and “discretionary”. Would be great if you created a report/tab like this @peter @TillerTeam @tillersupport
One thing I am learning is that when my interest in becoming more granular with expenses becomes a priority, I am spending too much time cataloging after the fact. I need to spend more time before-hand building a budget with broader groups that are in line our home’s priorities and then adjust our living to match those. For us, that’s the power in budgeting: a plan that actually works and helps us to make really impactful choices. Otherwise, I can feel really good to have everything amazingly catalogued, but miss the boat living where we mean to.