Hi  WhoMovedMyCheese .  I was facing this same quandary a while back.  I ended up choosing to do it the first way you listed, since the transportation was needed for the expense.  I also have a separate category for more standard transportation costs like public transport or gas for the cars.

I don't live in such a place, but I could look at it three ways. 

1. Have a category for Taxis.  Put the reason you need a ride in the memo, using the category name verbiage already in your budget. This is helpful is you would like the clearest report of how much you're spending on taxis.  You'll have to ensure your memos match the event categories if you ever want to see that total (by searching in All Accounts view).

2. Put the rides, as you say, in the category they were used for, with taxi in the memo. This would show the more inclusive category+related transportation in the reports, and would be very easy to create a consistent memo of "taxi" so searching All Accounts would bring up that data point. This might also be easier on the budgeting/planning side so you know how much is coming up. 

3. Just use a general transportation category for all subway/taxi/gas (if you have one), with Taxi as the payee, and the event in the memo. If you have the Toolkit, there's a spending by payee report. You can also sort by payee in All Accounts.

4. You could also have a Transportation for Necessities category and a separate Transportation for Recreation category.  That could give you better detail in reports if you're really trying to see where your money is going and why. Use the same labeling rules as in #3.

I would likely use #2 if I were budgeting with each paycheck and had my categories set up temporally. Right now, I set up my categories by function, and I like detail, so I'd probably do #4?

I would budget for the cab/uber/whatever separately, as it's easier to assess. If you start doing more activities outside the home (e.g., in the summer), it would naturally go up, but that's still fine, lots of bills gradually creep up. (Oddly enough, they rarely decrease! 😄)

I have normalized these sort of expenses in my budget so I can budget the average each month. This builds up a surplus in the low months and draws from that surplus so I don't have to scramble in the higher months. When starting out, though, you're probably not starting in the optimal month to build the surplus, so make sure you budget enough (or reallocate if necessary) to avoid overspending as well. Categories I treat this way: Taxi/Parking, Gas, Electric, Water, Natural Gas, Kids Activities -- basically anything that varies seasonally.

Either way works. It's up to you whether you're interested in keeping track of transportation costs or not. If you want to know how much of that is transportation, track it separately,

Personally, I'd track them separately for a better idea of spending. In thinner months, can I still go to the movies if I find a more affordable mode of transportation (maybe the carpool option instead of a solo Uber or Lyft)? Or do I have funds for transportation, but not enough set aside for a movie (maybe a free museum outing instead)? 

If you'd rather not track that information, or if it wouldn't help with your spending decisions, then track them as one. It comes down to personal preference and how your budget can best serve you. :)

I would make it a taxi category.  And if you also do taxi's to work, call that a separate category also, Taxi to Fun and Taxi to Work categories.  You may want to know how much you spend on taxis a month.

I would definitely keep Transportation costs separate, because if you ever have to contemplate a move, that's an expense that could substantially change.  It would be helpful to use your historical category spending to figure out when certain location, professional, or lifestyle changes make sense.

TeaPot said:
Don't use credit cards if you are not paying them off every month and don't be fooled with the benefits that are tied to them.  Use one credit card only if you want to be in control.

This is a different subject altogether. Many of us here use many CCs and pay them off each month and are in total control. They are just a tool that can be used for good (rewards/warranty extension/theft protection) or evil (debt/overspending).