Categorizing expenses without overthinking it

Almost everyone who starts tracking expenses builds a category tree on day one: groceries, groceries (organic), groceries (household), groceries (the weird shop near the office). By the third week the tree is a chore and the tracking stops.

A category exists to answer one question: what kind of spending was this? If two categories would never lead you to a different decision, they are one category.

Start small

Eight to twelve categories cover most lives. Housing, food, transport, health, subscriptions, travel, shopping, and one for everything else is a perfectly respectable start. The app comes with a default set for exactly this reason: so that your first expense does not begin with a design exercise.

Rules that keep a list healthy

• Keep "Other" small. If it grows past a tenth of your spending, something deserves its own name.
• Merge, don't rename around the problem. When two categories turn out to be the same thing, merge them and your history follows.
• Pick the obvious one. If you hesitate for more than a few seconds, take your first instinct. Consistency matters more than precision.
• Review once a quarter. Look at what ended up in the vague ones and decide whether a new category would have helped.

When you need more detail

Detail belongs in notes and tags, not in more categories. A category tells you what kind of money it was; everything else about the purchase can live next to it without cluttering the list you look at every month.