Advice on categories for one time purchases and variable uses?

My wife and I have been using YNAB for a little over a month now, and we wanted to ask a couple of questions to get your opinions on certain categories. Right now, we have our needs category, which includes rent, groceries, internet, electric, phone, clothes ($5.00 a month gets put in here for end of year clothing needs), and home supplies (for sponges, dish soap, etc). Transportation is separate, with gas, auto insurance, auto maintenance, and bike maintenance. With regards to this, does it generally make more sense to put stuff like this in "needs?" I'm not sure how many category groups are normal in YNAB, or what would make it easier to parse through later, as well as checking out the reports at the end of the year for fun.

In addition to this, we purchased a used car recently, and it's currently categorized under auto maintenance, as in "we paid this much money to maintain our ability to drive a car." But for these bigger one time payments, like a car and a house, does it make more sense to have it separated into a long term section down at the bottom of YNAB? That way, I could just add money each month to that category to build it up over time.

Finally, last question, but our eating out category is under "fun spending." I feel a little weird about this, because date nights are one of our non-negotiable things. We usually spend about $30 a month on date nights, and it feels like it should be under needs, not fun spending. However, there are times when we take friends out to eat as well, if they need someone to talk to, or going through a rough patch. How granular do you recommend getting with category splitting like that?

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  • I recommend starting out more granular on YNAB so you can get a good sense of your spending and exercise greater control. Over time, you can hide, archive, delete, or combine categories that don't serve you anymore.

    Your transportation spending sounds like it makes sense in its own separate category because there are multiple aspects to it.

    I would suggest putting large purchases like cars under a different category from maintenance because they will likely have different costs and happen at different times.

    You can separate "date nights" from other dining out spending. I tend to organize my categories in order of importance from top down, so if date nights are more important to you, you could place it above "miscellaneous dining out" in your budget. Hope that helps!

  • Hello, theBrokeCarpenter

    Welcome to the YNAB forum.

    Perhaps a different organizational structure would be more helpful to you.  There are lots of different ways to organize your categories.  I like to group a lot of mine in a temporal way, that is by anticipated frequency of transactions.  As a demonstration of how that looks, my car-related subcategories fall into four different master categories:

    •  fuel is under my monthly living group of expenses (all the frequent categories I use every month, both discretionary and essential)
    • registration, and licensing is grouped in with other insurance/licenses in my scheduled irregular (annual) expenses, True Expenses master category.
    • saving up for my next car happens in my saving and investing master group for medium-term and long-term planned purchases and retirement investing (originally I had a car loan payment category grouped in my debt master category; after the debt was gone, I renamed it to Next Car, dragged the category to savings/investing, and started allocating a monthly amount towards the purchase of my next car
    • car care and maintenance (also includes the amount of my car insurance deductible) falls in under my emergency group of categories. Yes, car maintenance can be predicted, but the timing tends to surprise one, so I have the funds grouped in my Life Happens master category.
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  • The answer to all of the above is "do what works for you."  The budget is malleable, so you can rename/move/play around with/add/combine categories as you figure out what that is. If you're looking at a category and going "what do I put in this?" or "what do I *not* put in this?," it's not a good category. 

    For me, the most important part of how I organize the category groups is "Can I find where to put this easily when looking to see how much I can spend?" which is basically, do I know where to find it. I ended up grouping my car stuff together because I went to check a category and couldn't find where I'd put it. Was maintenance under "Annual" or "Random"?  Where was the inspection category? 

    The other reason to have categories is to modify behavior. I know people have talked about having a separate category for e.g. coffee, if they wanted to stop spending so much at Starbucks.  I'm new enough to this that I haven't developed those types of categories yet, but if there's something you know is an issue, make a category for it.

    There are a few forum conversations about what people's categories look like, and I think my big takeaway is there's no "normal" number of categories or ways to group things. It does seem like people tend to separate out bigger purchases (new car) from things like maintenance, but if your head thinks about those as one thing, there's no rule saying you can't combine them.

    It's clear from what you said that you have two ways of thinking about eating out - date night, and eating out with friends.  So make two separate categories for that. (Date night sounds to me like a need and a fun spending - it's okay to put needs in other categories, if they fit better there in your head. You can always move it if you find where it's sitting now isn't working.)

  • Hi! Welcome! My colleague Kelly wrote a good article about categories that you might find helpful, here, and it has a video at the end that talks about different ways to organize your budget. :)

    Personally, my husband and I just track all meals and entertainment in one bug bucket without much detail because we have a ballpark we spend and are comfortable with our spending there; it's under a heading called "Quality Life" along with clothing, discretionary household spending, etc. But, in areas in which we want more detail and have goals, we get more granular. For instance, one thing that is super helpful to me personally is using YNAB to know when monthly expenses are due and paid, so I have a group with separate lines for each individual monthly bill.

    You can choose what works for you! What data do you want? What feels overwhelming when you open your budget and what feels just right? You choose! ;)

  • As it's been mentioned, YNAB can be tailored to suit you. How do you want to set it up? What works best for you? I would suggest for one time purchaes or variable purchases you could create a category like "miscellaneous" or "irregular purchases".  For this I have kept the category "stuff I forgot to budget for".

    I recommend spending some time watching the videos, either on the website or go to YNAB on YouTube. These videos gave me a better understanding of the principles of YNAB and how to make it suit me. There is no right/wrong way. Budget Nerds with Ben & Ernie (YNAB/YouTube) has videos on how they do their categories and they are different to each other. 

    I got serious and started using YNAB in Febuary this year. Personally for me, I have listed each expense as it's own category and put the date of when it is due, then sorted it in numerical order by the date. 
    I have a Heading for monthly expenses and a Heading for Annual expenses. So for instance under my monthly heading I have "Netflix - 10th", "Insurance - 15th" etc so it makes it easier for me to know what my money had to do next (paid on the 6th - to cover all upcoming expenses till next pay date I look down my list for any expenses from the 6th onwards)
    My Annual heading has categories set out the same eg: Car registration - 10th Feb, YNAB Subscription 12th April, School Fees - 15th May, etc

    For my car, I have fuel, registration, servicing, tyres all seperate because thet are due at different times and it is easier for me to set goals for each one individually rather than combining them and trying to budget for a large lump sum goal. So some of my car expenses are monthly, some are annually. 

    As for your date night, create a category specifically for date night and if you know you usually spend $30/month for you and your wife to go out, then set a goal to save a little bit more each month and that will accumulate over time and cover when you take a friend out. 

    I changed all the headings to suit myself. I am also transitioning from a different way of thinking/budgeting but my Headings are: "Everyday" (groceries & fuel), "Money Hounds" (Things I have to pay for each month), "Money Sloths" (Bi-yearly or yearly payments), "Sh*ts & Giggles" (dining out, fun money, clothing, etc), "$$$ for the future" (Christmas, emergency funds, etc). 

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