Setting up spending categories that match your life

Most category systems collapse because they have too many categories. Here's how to build a set you'll still be using in a year.

By António Avelar Updated 13 August 2026 4 min read

The standard failure looks like this: someone sets up thirty-two categories in a burst of enthusiasm, spends two weekends sorting transactions into them, discovers that Household — cleaning products has €14 in it, and never opens the app again.

Categories aren’t free. Each one costs attention every time you read a breakdown. A system with too many of them is harder to read than no system at all.

The test a category has to pass

Would you do something differently based on this number?

That’s it. If the answer is no, the category is decoration.

Groceries passes: €640 instead of €400 changes what you do next week. Rent passes, barely — you can’t change it this month, but you need it to know what’s fixed. Bakeries separate from Supermarkets fails: there is no decision that treats them differently.

Apply the test honestly and most people land on eight to twelve categories. That’s the right order of magnitude.

A starting set

If you’re building from scratch, this works for most people:

Housing — rent or mortgage, condominium, utilities
Groceries — supermarket, market, corner shop
Eating out — restaurants, coffee, delivery, lunch at work
Transport — fuel, public transport, ride-hailing, parking, insurance
Subscriptions — everything recurring and digital
Health — pharmacy, appointments, insurance
Shopping — clothes, household goods, electronics
Fun — cinema, concerts, trips, gifts
Other — genuinely everything else

Nine. Note that Eating out is deliberately separate from Groceries: they’re both food, but one is a fixed requirement and the other is the single most elastic cost most households have. Merging them hides the only actionable half.

Let “Other” exist

The instinct is to eliminate the catch-all. Don’t. Every real month contains a vet visit, a parking fine, a wedding present and a plumber, and forcing each into a named category creates categories that see one transaction a year.

Watch its size instead. Under about 10% of spending, it’s healthy. Above 20%, it’s hiding something — look at what’s in it and you’ll usually find one recurring thing that deserves a name of its own.

Split by behaviour, not by thing

The categorisation people reach for is by object: food, clothes, transport. The categorisation that actually drives decisions is by how much control you have:

Fixed — same every month, can’t change it this month
Variable — you influence it week to week
Savings and debt — money leaving to your future self

You can layer this on top of the nine above, and it’s the split that answers the real question, which is not “what did I buy” but “what could I change”. Fixed vs variable spending covers how to use it.

One more reason to keep the health, education and housing categories clean: they are the ones you compare against e-Fatura each February. The IRS deductions guide covers that check.

Let corrections do the work

Building the category set is the manual part. Maintaining it shouldn’t be.

When transactions are named properly, most of them categorise themselves — a supermarket is groceries wherever you shop. Your job is only the ambiguous ones, and each correction should stick: recategorise a merchant once and Bica applies it from then on. See categorization.

For the cases a merchant name can’t settle, use a rule. The two that earn their keep for almost everyone:

The supermarket that isn’t groceries. Household goods and food from the same store, split on description text.
The transfer that’s actually rent. A payment to a person’s name that only you know is your landlord.

Rename things to sound like you

If you think of it as Fun money rather than Discretionary, call it Fun money. This sounds trivial and isn’t: a breakdown written in your own vocabulary gets read, and one written in accountancy language gets skimmed.

Some people go further — Fixed, Guilt-free, Future me is a complete and perfectly workable set of three. The categories are for you, not for a filing standard.

Revisit once, then leave it alone

After two months, look at your breakdown and ask two questions: which category never had anything interesting in it, and which number surprised me. Merge the first. Consider splitting the second.

Then stop. A category system that changes every month can’t show you a trend, and trends are the entire reason for having one. The weekly review is where you use it; it isn’t where you keep rebuilding it.