Category Names
I find myself wishing I had better names for my categories. Right now I have Bills (things due on a certain date with a set amount), Necessary Expenses (things I need every month but doesn't have a set amount. like groceries and gas), Planned Expenses (things happening in the future that should be budgeted for like a new car and christmas gifts), and Self Care (anything that I don't NEED to live, but gives me piece of mind or makes me happy) are my biggest ones.
What category names do you have? Did you keep the "True Expenses" group? I found that I didn't really understand what that meant, so I broke it up into groups that made sense to me.
I want to hear why you've organized yours the way you have!
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Master categories are:
Flexi(ble) includes groceries, personal care, pet care, takeout, sales tax., etc. Things that occur regularly but that can vary. I don't own a car, so car-related categories don't exist, but would be in here if I did.
Fixed are those regular bills that occur monthly and are mostly the same every month.
Future are what YNAB calls "True Expenses," a term that doesn't make sense to me, either. These are things I'm "saving up for," or better put, planning for. Annual fees, various savings targets, holiday and gift expenses, subscriptions and renewal fees. Fun money is in here, as are my Emergency Funds.
I also have Income for Next Month (INM) which is where I park this month's income, until it will be applied to future months.
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JoeDid Why do you park your income for next month in a category instead of budgeting it in the next month? I have never had enought to budget for the next month (yet), but I have seen others do this and was wondering why that way instead of budgeting into next month?
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Emma Catherine I'm leery of the Stealing From the Future problem, which has been discussed at length here. It's a situation where, if you're not careful and very mindful, a change in the current month can result in a shortage in the future, something that can catch you off-guard and short funded.
I'm now six weeks ahead, but I'd rather see what I've got for future months in a safe envelope.
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I get around this in two ways:
1. A category called Oops! Fund. I funnel a small amount per pay into it, and it acts as a buffer in case of overspending or a lack of foresight. It isn't for every time you overspend on your groceries; it's for true "oh crap" moments. For example, one of my bills increased by $3. I had been given notice, but didn't register it in my budget. When the bill came out, I rounded up the category in YNAB from the Oops! Fund. The following month, I made sure to budget the right amount for the next payment.
2. A built-in buffer for each category. I round up every bill payment (rent, childcare, utilities) by $5. My phone bill is $45.20 per month. I fund the category (and have its goal set) for $50.20. I go over my bill by about $5-10 once or twice a month, usually when I'm on vacation, so this covers those overages, and builds up the category for future bill payments.
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Correction: I go over my phone bill once or twice per year by about $5-10.
These two strategies let me comfortable budget into the next month, knowing I have safeguards in place to cover any mishap in the current month.
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My Category Groupings are:
- Monthly Bills (Checking): Bills we have every month
- Irregular Bills (Checking): These are like Amz Prime, Pool Pass. Aka things that are sinking funds to save for but bills overall are on the smaller size
- Life (Checking): Things like haircut, fun money, splurge, Income For Next Month, etc
- Insurance Bills (Savings): Prop Tax, Car Ins, Identity Theft Ins, Life Ins, etc. These are larger bills and irregular so they remain in savings to accrue more interest. Move the funds sometime before the bill is paid.
- Sinking Funds (Savings): Scoped Sinking Funds. Eg Birthdays, Summer Vacation, Winter Vacation, XMas Vacation, XMas Presents, Extra Curricular Activities, etc. These are funds where the month is basically known where the funds will be used.
- Bucket Savings (Savings): These are open ended Sinking Funds where the month of usage is not really known. EG: Clothing category for each fam member, Emergency Savings, Kids School Activities, Medical, Maintenance, Benevolence, Wish Farm categories, etc.
Total categories is around 115.
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I'm only on month 3 but I think I like where we've landed with our groupings and categories.
- Giving: To our church and then other charities
- Everyday Expenses: Dining out, groceries, gas, etc.
- Bills - Monthly: These are sorted by the date they are due. I originally had debt (student and car loans) in a separate category but because it is a monthly bill, we treat it as such. When paying those off more aggressively becomes a priority, I'll move them out.
- True Expenses: Hair cuts, auto maintenance, household necessities, gifts, etc. These are categories that we are building up regularly so that when the random expenses come up, we already have money there.
- Just for Fun: My husband and my fun money! We also have "cash" we got from our wedding that we want to be intentional with. We have that accounted for here.
- Bills - Annual: Amazon, YNAB, car registrations, insurance, etc. These are sorted by date and I move them to the bottom of the list once they past, reset the goal, and start saving again.
- Savings: Down payment on our first house, the millions of weddings we have this year, trips, Christmas, and job loss
- Hidden Categories: This is where I hide not only irrelevant categories but also ideas I have for future categories, like a wish farm! I want to try that but it won't happen till we finish saving for the house.
53 not including hidden categories.
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My category groups are Monthly Obligations, Kids, True Expenses, Personal.
As my budget has evolved, I ended up I grouping less-than-monthly bills (quarterly trash bill, Amazon Prime, etc. - technically "True Expenses") under Monthly Obligations because they HAVE to get funded a certain amount each month in order to make sure there are funds available when the bill comes due. My "True Expenses" is really more like lumpy expenses/sinking funds - for those "I know I'm going to need this category eventually but I don't know when or how much" events. I just haven't bothered to update the category group name. "Kids" and "Personal" are self explanatory, I think?
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Here are mine:
Income for Next Month
Dream Farm: aka wish farm
Housing: bills like rent, renters insurance, utilities, household supplies (eg toilet paper, cleaning supplies)
Transportation: gas, car insurance, maintenance, car registration, and future car (was auto loan but paid that off in December)
Food: groceries, convenience dining (used mainly for when I get take out instead of cooking for me and the kids), dining out
Subscriptions: life insurance, YNAB, Amazon Prime, etc.
Kids: Allowance, grade money, clothing, school lunches, school expenses, music instrument, haircuts, savings account. I will be adding a category for expenses I am anticipating for my son’s Senior year of high school and to start saving for car insurance/gas for my daughter when she starts driving in November.
Self Care/Personal Development: massage, health and beauty supplies, clothing for me, hair (cuts, coloring and salon products), craft retreats (2x per year), books, hobbies, classes/workshops/seminars
Other Discretionary: household upgrades and maintenance; technology upgrades and maintenance; giving; theater; concerts; random fun, spending money
One-Time Expenses: kids first car, 401k loan payoff, divorce (my divorce was final at end of 2019 but there are some residual expenses)
I also have a separate category for Vacation. I use a separate budget while we are on vacation to manage our spending but categorize the actual transactions after the vacation is over here. I put a #vacation description in the memo if I ever want to see what we spent on a specific vacation.
i also have a category for moving but nothing is in this one right now as I just moved in this place and plan on being here til my daughter graduates from high school.
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I've been off and on YNAB for two years. One of my problems was having too many category groups, so now I keep it simple with three: Fixed, Future, and Fun. I love this structure for big-picture reporting; if I want granularity, I look at the category group. I set monthly funding goals to act as a template for each month and to assess my money's current allocation. Prioritization is key.
Fixed: any regular, necessary bills, including savings (treat it like a bill and you will build it up). Medical, transportation, groceries, rent, childcare, they all go under Fixed. It could also be called Living, Monthly, Regular, or Musts.
Future: future musts. Hair cuts, electronics, vacation/trips (I make an annual trip to the same place and do a couple of weekend trips every year), legal/taxes, education, and professional development are some examples. It could also be called Savings Goals, Plan[ned], or Needs.
Fun: 100% optional expenses that feed my personal interests and could be dropped if I needed more cashflow. Dining out, activities (museums, swimming lessons), gifts, giving. It could also be called Lifestyle, Entertainment, Joy, Wants.
As I have credit cards I use a fourth category generated by YNAB called Credit Card Payments.
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I just started within the last month so still tuning what works for me (and still learning how it all works). A main consideration is that I have multiple savings accounts for different purposes (high interest ones, etc) at different banks in addition to the one i use for bills. I don't want to "mix" the pots of money where I don't understand how much i should have in each account.
So I have:
Monthly Fixed Expenses: Anything and everything where the cost is fixed and will be spent monthly regardless of the "kind" of expense (e.g. my mortgage, netflix, and even 529 savings for kids are under here). These are one and done expenses for which I've created monthly goals and scheduled transactions. I've also suffixed each subcategory with the day of the month that the bill generally gets paid, and ordered within the main group based on this).
Monthly Flexible Expenses: Anything where I spend in that category monthly where there is some discretion in how much i actually spend (gas, groceries, entertainment, etc). I've created monthly budgeting goals for these.
Build Up Intermittent: Anything where I don't pay monthly, but small enough total amount that don't want to bother storing in one of my high interest savings accounts or may need access to money sooner than an ACH transfer might take. This includes amazon prime membership, medical, etc. I've set up various types of goals for these (target balance, by date, etc) based on whether I pay them yearly or more frequently.
* Savings Group: I have multiple of these - one for each saving account and named based on the bank in which the funds are held. Each has the associated subcategories for which the money for them are held in that savings account. This includes emergency fund, house insurance, property taxes, etc (stuff where i want the higher interest and i won't need to move money out often). The advantage of this for me is that the Savings Group totals should reflect the balance of the accounts at the bank. When they don't, it indicates I need to move money (e.g. end of the month i'll "sweep" the funds I set aside for the categories up to the appropriate account).
I started out with more main categories to try and classify the "purpose" of the expense (fun, keep the lights on, etc) but ultimately decided the top level goal for me was to track the "flexibility" of the expense (e.g. - i have wiggle room on all the flexible, but i sure as heck better have the fixed funded by the date). I wish YNAB allowed me to add keywords or something to each sub category to have more flexible reporting (e.g. so I could mark netflix as a fixed entertainment expense, while my mortgage is a fixed keep the lights on expense).
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Gold Robot I love the idea of having different categories for each savings account! I’m in the process of moving my emergency fund from my savings account to my checking account (because it’s not really an EF if I don’t have quick access to it 🙄) and that would help me keep everything in order, so thank you for sharing!
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Emma Catherine depending on the amount of that category, can could result in a big loss of interest earned.
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RIP_MSMoney That's true, however, rates in a savings account do not outpace inflation. A little money is better than no money, but you can have too much in savings; a large chunk would be better served in longer-term investments.
I built a cushion into each bill and keep 3 paycheques' worth in savings, which is occasionally rotated in a GIC ladder to give it a little boost. These funds are for use in case of emergency travel or time off (I don't have vacation or sick pay). The rest is invested and earns more than it would in a 2.20% interest account. This is a personal choice that does not suit everyone. At the end of the day, you have to do what lets you sleep at night.
Emma Catherine Smart choice to pad your chequing account. Keeping a couple of months' of bills in chequing looks favourable, to you and to financial institutions.
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I don't like the default YNAB categories, and prefer to group mine by function for the head categories/groups:
Savings
Home - mortgage maintenance etc.
Household - groceries, school. etc.
Utilities - electricty etc.
Technology - computers, subscriptions etc
Car - fuel, maintenance, etc.
Work - expenses, university, etc.
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kristin said:
A little money is better than no money, but you can have too much in savings; a large chunk would be better served in longer-term investments.Then that would be bad for an Emergency Fund. My point is that an Emergency Fund should be accessible. So investing is not a good idea. Next best is savings. Better to get something over nothing. I mean if your Emergency Fund is massive than you could argue half investment and save liquid but this conv was keeping the Emergency fund in savings vs checking. For us that is 100 a month of interest...
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RIP_MSMoney Your emergency fund must be huge or your interest rate very high if you're making $100 per month in interest. Well done.
To clarify, the money moved into investments would no longer be considered for emergencies as it would not be convenient to get to. I'm not a fan of keeping more than a month or two worth of expenses in an emergency fund, as I believe anything more would be better served elsewhere.
For me, the amount saved for emergencies is best in chequing compared to savings because it is accessible and the amount I save doesn't earn much interest in a high interest account.
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RIP_MSMoney this has gotten a little off topic, as I was only asking for how people categorize their groups lol. My EF currently is $1000 as I am working on paying off debts. And I feel most comfortable keeping that in my checking account. You may feel more comfortable keeping it elsewhere and that’s perfectly fine! I was only asking for categories ❤️
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I have a bills category which is the monthly bills (Hulu, cell phone, mortgage, etc). I have another group called Freedom Accounts based on a book I read 10-15 years ago called Debt Proof Living by Mary Hunt. Its called a Freedom Account because it gives you freedom from debt, because you plan ahead for larger expenses such as yearly homeowners insurance, property tax, vacations, Christmas, renovations, etc.
If you look at vacation, you see a large balance there. We cancelled our upcoming cruise since we were still within the full refund phase to allow time to see what happens with this virus. We are both nurses and could not take extra time off if ship is delayed or if we have to quarantine. Maybe things will improve and we can rebook. I will leave the money in this category until I’m ready to use it again for vacation. I was wondering how bad all of these refunds from several companies would mess up my YNAB, but it was very simple.
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I've also just started in YNAB. Started trial in November and played around then did a Fresh Start recently once I (think) figured out I was doing. Here are my categories
Home Bills - are all those mandatory fixed payments every month - mortgage, internet, phones, etc
Home Expenses - are the other required monthly expenses to live - groceries, gas, pets, health
Living Life - is the fun - Eating Out, Gifts, Entertainment, Clothing, Christmas
Periodic Expenses - are the "saving for" or "Sinking funds" - yearly software subscriptions, auto maintenance & licenssing, vet fund, home maintenance
Wish Farm - what we are specifically saving for right now - New pots & pans, trip to Florida
Wish List - all those other things we think we might want
Savings Account - this is a specific category that reflects my bank saving Account - has two sub categories - Emergency Fund ($1000) and Property Taxes - the rest of the balance. ( I move it over here so I won't "accidently spend it before it's due :) )
Savings - General - basically it's an extra checking account that we haven't closed and only has a little bit of money. At one time was considering moving cash monthly over to it and puting all of the Periodic Expenses there - but I think I've decided I'm going to close it.
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Jill McDevitt Love it! Seems like you have a good system and I love the emojis lol
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Emma Catherine Thanks! Don't the emojis make it so much more fun?
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I started with just a few categories but over time have found that having more categories has helped me see more detail in the reports. I have these categories now:
Groceries
Mortgage
Investment Properties: prop 1, prop 2
Credit Card Payments: Credit card, Redraw
Savings: Emergency Fund, Buffer, Retirement
Utilities: Electricity, Gas
Health: Insurance, Medical, Chemist, Optometrist
House: Rates, Insurance
Pets
Professional: Registration, Insurance, Education, Supervision
Cars: Registration, Insurance, Green Slip, Repairs, Petrol
Personal/Fun: Clothing, Holidays, Gifts, Spending, Dining Out
Entertainment: Netflix, Stan, Austar,Internet
House/Yard/Repairs: a list of house projects, repairs that need doing
