How to Easily Categorize Your Spending

Have you been trying to categorize your spending, but you still have a lot of questions? That’s okay! It’s completely normal. It’s why I am here to show you how to categorize your spending.

Categorizing your spending can be difficult. Do gas station snacks fall under the gas or the restaurant category? Does hosting a dinner party still fall under groceries or does it go under “everything else”?

I’ll go over a few common spending examples and where they might fall in your finance or budget tracker.

Why Categorize Your Spending?

If you are trying to get your finances under control, the first place you need to start is with tracking your finances.

Are you overwhelmed with trying to create a finance tracker for yourself?! Don’t worry. I’ve already made one that I’m giving away completely free!

When you’re tracking your finances, you will need to categorize your spending in order to determine exactly where you’re spending your money.

When you move on to the next step of building a budget, categorizing your spending will also help you determine where cuts can be made.

Certain things are pretty obvious. You put gas in your vehicle to go to work – that clearly goes under the gas category.

However, what about when you put gas in your vehicle to go on vacation? Does that still fall under the gas category or should that be classified as a vacation expense?

The easiest way for me to lay it out to you is to list the most common categories and then list the items or purchases that would fall under those categories.

If you have any other categories that I didn’t cover or any other questions, leave a comment below!

Disclaimer: This is how I would categorize my spending and how I would instruct any students to categorize theirs. Everybody is different and you need to categorize your spending in a way that makes the most sense to you. You could follow this down to the letter or you could use it as a guide. It is completely up to you!

What Are You Categorizing?

Any dynamic spending is what you would want to categorize. Static payments for things like a mortgage or a car payment are not to be categorized. The static payments belong in your “fixed payments” table.

If you’re following along with your finance tracker (I hope you are!), the “other expenses” if where you’d be defining these categories and the spending that goes with them.

Spending to Categorize:

• Groceries
• Kid’s expenses
• Gas
• Eating out
• Pets

Spending NOT to Categorize:

• Mortgage
• Rent
• Monthly insurance payments
• Cell phone bill
• Water bill
• HOA fees
• Electric bill

Category: Groceries

Spending that belongs in this category:

• Food bought to routinely feed yourself or your family
• Household cleaning items such as Lysol wipes or laundry detergent
• Paper products such as toilet paper or paper towels
• Beauty products purchased with your routine groceries

Spending that does NOT belong in this category:

• Groceries that are bought while on vacation
• Groceries that are bought for a school project or dinner party
• Beauty products bought from a specialty store such as Ulta or Sephora
• Clothing purchased while you were grocery shopping at places such as Wal Mart or Target
• Household product/decor updates such as bath rugs or laundry baskets

Category: Gas

Spending that belongs in this category:

• Gasoline/fuel that is routinely purchased to fill your vehicle or someone else’s vehicle

Spending that does NOT belong in this category:

• Gasoline/fuel that is purchased on a company card
• Gasoline/fuel that is purchased during vacation
• Road trip snacks or any food that is purchased at a gas station

Pro Tip: If you are putting gas in a vehicle for company/business purposes, you could add this as a category in your finance tracker/budget tracker.

Category: Restaurants/Eating out

Spending that belongs in this category:

• Food that is purchased from a sit down restaurant
• Food that is purchased from a fast food restaurant
• Food that is purchased from a gas station
• A night drinking with the work crew or friends. Or both.

Spending that does NOT belong in this category:

• Ready made meals from grocery stores
• Alcohol bought from a liquor store or beer distributor

Category: Personal Care

Spending that belongs in this category:

• Products bought from a specialty store, such as Ulta, Sephora, or Amazon
• Nail appointments
• Massage appointments
• Wax appointments
• Hair appointments

Spending that does NOT belong in this category:

• Doctor’s visits
• Personal care items listed above in the groceries category

Category: Healthcare

Spending that belongs in this category:

• Doctor’s Appointments
• Perscriptions
• Vitamins/supplements
• First Aid equipment
• Healthcare equipment such as wheelchairs or braces
• Yearly premiums

Spending that does NOT belong in this category:

• Massage Appointments
• Personal care items bought from a grocery store
• Monthly premiums

Category: Travel/Vacation

Spending that belongs in this category:

• Groceries purchased on vacation
• Eating out while on vacation
• Gasoline/fuel used to get to your location
• Souvenirs purchased on vacation
• Items bought specifically for a particular vacation
• Tickets or passes purchased on or in preparation for a trip
• Accommodation costs

Spending that does NOT belong in this category:

• Items bought for general use that could also be used on vacation (i.e beach towels or camping equipment)

Category: Pets

Spending that belongs in this category:

• Food purchased for pets
• Vet bills
• Accessories bought for pets, such as leashes or beds
• The actual pet themselves

Spending that does NOT belong in this category:

• House repairs needed because of the pet

Category: Kids

Spending that belongs in this category:

• Seasonal sports or afterschool program costs
• Uniforms for said sports or afterschool programs
• Equipment for said sports or afterschool programs
• New clothes for school
• Passes/tickets bought specifically for kids, such as Sky Zone or the community pool

Spending that does NOT belong in this category:

• Groceries bought to feed your kids
• Snacks/food bought for or during the sports or afterschool programs
• Continuous sports or afterschool programs (this would be a static payment)

Category: Clothing

Spending that belongs in this category:

• Any clothing bought during your routine shopping at Target or Wal-Mart
• Any clothing bought from a department store
• Any clothing bought from a thrift store

Spending that does NOT belong in this category:

• New school year clothes bought for the kids
• Clothes bought for your pets

Category: Everything Else

Spending that belongs in this category:

• Anything that couldn’t be categorized into another category
• Unexpected vehicle repairs
• Yearly subscriptions
• Yearly insurance

Spending that does NOT belong in this category:

• Anything listed in any of the categories above

Final Notes on How to Categorize your Spending

The first step to getting your finances under control is tracking your spending. Well, tracking requires categorizing. It can be extremely straightforward, but other times, you’re wondering where the cost of this tank of gas goes.

Our spending habits are pretty static so after a few months, you will have a good idea of exactly how to categorize YOUR spending in the best way that works for you. Over time, categorizing your spending will become second nature.

Until then, I hope this has helped steer you in the right direction!

After you’ve tracked your spending for a minimum of three months and you have nailed your categories, you are ready to move on to building a budget! Check out the Single Woman’s Guide to Budgeting!

Are there any other categories that you might need examples of? Or any spending that you need a category named for? Leave me a comment so I can help you!

Happy saving everyone!