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What Categories Do I Need to Create a Budget?


Question: What Categories Do I Need to Create a Budget?

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.

All About Spending Categories in Financial Software

Answer: To decide what categories you should use for budgeting in personal finance software, you need to track your spending for a week or two and then decide how you would categorize your expenses. Other expenses will come along that you may not think of right away, such as semi-annually insurance payments, but you can add those in your financial software later.

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:


  • Fuel/Gas
  • Repairs
  • Licensing


  • Home
  • Auto
  • Life
  • Medical


  • Food
  • Vet
  • Toys

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.

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