Budget category

A category is the unit a budget is made of. The amount is set per category, each transaction is filed under exactly one, and the comparison a budget exists for, what was planned against what was spent, happens per category, which is why a total is only as good as the filing behind it. A category earns its place when a change in its total tells you something you can act on: dining out at $340 against $250 says cook two more nights, and a miscellaneous line at $600 says nothing, because it contains everything. The category is what the money bought, never where it was bought, since one receipt from a superstore can belong to three of them.

In a sentence

• "Groceries is our largest flexible budget category, $580 a month, and it ran $45 over in March."
• "A store is not a budget category; what you bought there is."
• "We keep twelve budget categories, one for each decision we actually make about money."

How it works

Categories come in four types, and the type decides what the total is used for.

1. File every transaction under exactly one category, by what was bought rather than where. A superstore run that is $71 of groceries and $25 of household supplies is split into two parts, or given one consistent home.
2. Keep one category per spending decision. Split a category only when its halves would get different amounts, groceries and dining out; merge one that stays under about 2% of spending for three months and changes no decision.
3. Give fixed bills fewer categories than flexible spending. One utilities category holds four bills, because there is no decision inside the electric bill.
4. Let groups do the summarizing. Food is groceries plus dining out, Home is rent plus utilities plus supplies, and the grouped totals show the shape of the month without any adding up.
5. Keep the list stable, changing it at most once a quarter and archiving rather than deleting, so that last year's totals stay comparable.

An example

One week of transactions, filed.

The card payment is filed in a transfer category that no spending total includes, because the purchases it settles were counted on their own dates. Groceries stands at $213 after this week, and by month end four weekly shops and the split superstore runs put it at $625 against an amount of $580. The $45 is a number about cooking rather than about filing, because every grocery purchase landed in the same place, and it can be compared with last month's $590 for the same reason.

Why it matters

The category is where the budget's amount lives and where the month is compared with the plan, so the budget is only as true as the filing. The value of a total is that a change in it is a change in behavior, and that holds only when the same kind of purchase lands in the same category every month: a coffee shop filed under dining out in March and under coffee in April moves both totals by $60 with nothing having changed. The mistakes a good list prevents are the usual ones: a miscellaneous category holding a tenth of spending, categories named after stores, a category for a vacation that bends the monthly totals around one trip, and a card payment filed as spending, which counts the month twice.

Budget category versus tag

A category says what kind of spending a transaction was, and each transaction has exactly one; a tag says what the spending was for, and a transaction can carry several. A trip, a renovation or a side business is a tag laid across the categories it touches, so the trip's meals stay in dining out and the tag adds them up with the flights and the gifts. Categories are exhaustive and feed the budget; tags are optional and feed project totals. See Tags versus categories.

Common questions

How many budget categories should I have? Ten to fifteen for most households, one for each spending decision you actually make. Past about twenty, the extra ones are usually stores, single subscriptions, or splits that would get the same amount anyway. See Which categories a budget should have.

Is a budget category the same as a tag? No. A category is what kind of spending a transaction was, and there is exactly one per transaction; a tag is a label for what it was for, and a transaction can carry several or none. A system with only tags has no monthly totals to compare.

Should a store be a category? No. A store is where the money went, and a category is what it bought; a warehouse club sells groceries, tires and a television. Split the receipt by what it holds, or give the store one consistent home.

Where do savings and card payments go? Saving goes as a transfer to a savings account or in a savings category kept apart from spending, so it never looks like money that left. A credit card payment goes in a transfer category that no spending total includes, because the purchases it settles were counted on their own dates.

Go deeper

• Which categories a budget should have gives a starter list in six groups, the rules for splitting and merging, and a list cut from 28 categories to 14.
• How to categorize transactions so the totals mean something covers what-not-where, one home per merchant, rules that repeat a correction for you, and the weekly review.
• Tags versus categories tracks a trip, a renovation and a side business across the categories they touch.

Where it shows up in Zypper

Zypper starts you with a default set of categories and lets you reshape it. Every category is yours to create, rename, archive or delete; a category has a name and an emoji and lives in a category group with a color and a type, income, spending, savings or transfer. Each transaction is categorized automatically as it arrives, and your edits always win over the automatic choice; a transaction has exactly one category and any number of tags, and filtering the transactions page by a tag shows everything with that label and its total. A rule matches on merchant, category, account, amount and keyword and sets the category, renames the merchant or adds tags for every matching transaction that arrives after it exists. See Customizing categories and groups and Organizing transactions with tags for the details, or get started with Zypper to shape your own list.