How to categorise your expenses.
A list that answers real questions.

How many categories should you start with?

Enough to answer “where does my money go?”, few enough that choosing one takes a second. In practice that means eight to ten top-level categories for expenses, one of them Other, and subcategories only under the two or three categories where you spend most often.

A useful test: if you hesitate between two categories more than once a week, the line between them is unclear — merge them or write down a rule. If one category holds a third of your spending and you can’t say what is inside, it needs subcategories.

A practical list of expense categories and subcategories

This list covers a typical household. Take it as a starting point and delete what you never use:

• Food: groceries, restaurants, coffee, delivery.
• Transport: public transport, taxi, fuel, parking.
• Housing: rent or mortgage, utilities, internet and phone.
• Shopping: clothes, electronics, things for the home.
• Entertainment: subscriptions, cinema and events, hobbies.
• Health: pharmacy, doctors, sport.
• Travel: tickets, stays, spending on the trip.
• Gifts: birthdays, holidays, donations.
• Other: whatever doesn’t fit yet — check it monthly.

Add a category of its own only for a real part of your life: Kids, Pets, Car, Education or Insurance. A household with a dog will want Pets from day one; a student without a car never needs Car.

Income categories

Income needs fewer categories, but keeping them apart shows where your money comes from and how steady it is:

• Salary — your main job.
• Freelance or side income — orders, tutoring, selling things. See tracking a side income.
• Gifts — money from family and friends.
• Cashback and interest — small, but worth seeing.
• Other — refunds of deposits, one-offs.

Moving money between your own accounts is not income, and a friend paying you back is not income either. Record both as transfers, or your month will look richer than it was.

Rules that make sorting easy

1. Sort by purpose, not by shop. Shampoo bought at the supermarket is not groceries if you want to know what food costs. Split the receipt, or accept small blur and stay consistent.
2. One subcategory, one question. Coffee as its own subcategory answers “how much on coffee?”. If you never ask, it is noise.
3. Fixed costs together. Rent, utilities and phone under Housing make it easy to see what the month costs before you buy anything.
4. Decide the grey cases once. Is a gym membership Health or Entertainment? Either works — write the rule down and stick to it.
5. Keep Other small. If Other is among your three biggest categories, something inside deserves its own name.

Common mistakes when categorising expenses

• Categories by payment method. “Card” and “Cash” are accounts, not categories. A coffee is a coffee however you paid.
• The same thing in two places. Coffee under Food and again under Entertainment splits one habit into two half-numbers.
• Savings as an expense. Money put aside still belongs to you. Move it to a savings account as a transfer; for a target, see savings goals.
• Forty categories on day one. You will stop using half of them within a week, and the rest become guesswork.
• Never revisiting the list. Your life changes — a new flat, a child, a car. The list should change with it.

How to change categories later without losing history

Review the list after the first month and again after three. Renaming is harmless. When two categories turn out to be one, move the transactions of one into the other and delete the empty one. When a category grows too broad, add subcategories and sort only the new entries — old months don’t need rewriting.

Don’t delete a category that has history unless you move its transactions first. Archiving is safer: the category disappears from the pickers, but last year’s numbers stay intact.

Categories in HonestExpenses

A new HonestExpenses account starts with a ready set close to the list above — expense categories such as Food with groceries, restaurants and coffee, Housing with rent and utilities, and income categories such as Salary and Freelance — in your language. Rename anything, pick an icon and a colour, drag to reorder, or move a subcategory under another parent.

Deleting a category that is in use asks what to do with its transactions: move them to another category, or archive the category and keep the history. Budgets work per category, and a parent’s budget includes its subcategories. Analytics shows each category month over month and year over year, and when you log by voice, every draft already lands in its category — see tracking expenses by voice.

Still setting up the habit itself? Read how to track expenses. It is free to start, and a new account gets 7 days of Pro with 20 AI actions.

Questions

Read next

• Log expenses by voice. One sentence, several transactions.
• Track Apple Pay purchases automatically. Pay in a shop — the expense records itself.
• Automatic expense tracking on Android. Pay with any card — the expense records itself.
• An expense tracker in Telegram. With a full app behind it.
• An expense tracker without a bank link. You log it — in seconds.
• How to track your expenses. And still be doing it in three months.