Defining Your Budget with Spending Categories
You do not need spending categories to keep an account register in financial software, but you will not be able to set up a budget or do budget reporting without defining spending or budget categories. If you want to really see where your money goes with a budget in financial software, you need to use categories.
Common spending categories for budgets would be: Auto, Groceries, Insurance, Banking-related Fees, Utilities, Clothing and Pets. These categories can be further broken down into subcategories as follows:
You will find that many financial software packages come with a set of spending categories already defined for your use. You can edit these categories, delete them or add your own categories to fit how you define your budget. A few financial software packages, such as Money Essentials, have fixed spending categories you must use and cannot edit.