For decision-making, 6-10 broad groups are enough: housing, groceries, dining out, transport, health, shopping, entertainment and subscriptions. It's worth splitting things further only when the app chooses the category for you, not you yourself: then extra detail costs nothing and only helps.
Key takeaways
6-10 groups are enough for decision-making.
Choosing a category by hand quickly gets tiresome.
Separate fixed expenses from flexible ones.
A large "Other" category is a sign to dig deeper.
How many categories do you actually need?
A category exists to answer a question, not for the sake of order. "How much do I spend on dining out?" is a useful question, and one category answers it. "How much do I spend overall?" isn't, and three categories like "household", "food" and "other" give you exactly that kind of useless answer.
The opposite extreme is thirty categories you manage by hand. Every expense turns into a tiny decision: is this "cafe" or "lunch"? "Hobbies" or "entertainment"? The answers end up different on different days, and after a month the numbers can no longer be trusted.
Why too many categories kill tracking
Compare two evenings. Before: you open the app, enter the amount, scroll through a list of 25 categories, hesitate between two similar ones, and pick one at random. Five times a day. After a week, entries become less frequent; after two, they stop altogether.
After: you write "sushi $18, taxi $9" in the chat, and both expenses land in their own categories automatically. The decision of where to file a purchase has disappeared from your day. The detail is still there: statistics show both sushi and taxi separately. The takeaway is simple: detailed categories only hurt when you're the one choosing them.
How to build your own set of categories
Step 1. Fixed costs. Housing, utilities, phone and internet, insurance. These are expenses that will come no matter what. It's useful to see them separately so you know how much money is actually left over.
Step 2. Everyday spending. Groceries, dining out and transport. This is usually where the biggest month-to-month swings hide.
Step 3. Flexible spending. Shopping, entertainment, subscriptions, gifts. This is where it's easiest to cut back if your budget doesn't add up.
Step 4. One category for your own question. Coffee, taxis, kids or pets: whatever you want to track separately because you suspect it's eating up more than it seems.
What to do with the "Other" category
If "Other" ends up among the month's largest categories, your tracking stops answering questions. Usually the reason is entries that are too short: "store $40" or just "$25" with no description. Write what you bought: "sneakers $40" will land in shoes right away, and "cat food $15" in pets.
Once a month, scroll through "Other" and see what keeps showing up. If the same expense appears every week, describe it more precisely next time.
How this works in Budget
Budget comes with 42 ready-made categories, from groceries and taxis to kids and charity. There's nothing to set up: just write your expense in Telegram or WhatsApp, and the AI assigns it to the right category on its own. "Subway $2.5" will go into public transport, "diapers $20" into kids.
You can't create your own categories, and that's a deliberate choice: a consistent list keeps your tracking from sprawling out of control. If a category was assigned incorrectly, write "delete last" and resend the expense with a clearer description. Category totals are visible in your statistics and in the monthly report, and we covered how to read that report in a separate tip.
Frequently asked questions
Do I need a separate category for coffee?
Only if you want to keep an eye on it. For most people coffee is just part of dining out, and no separate line is needed. But if you suspect your coffee runs eat up a noticeable chunk of your budget, a separate category will show that quickly. After a month you'll know the exact amount and can decide whether to keep the habit as is or cut back.
Where should a supermarket receipt with both food and household items go?
If there's only a little household stuff on the receipt, leave the whole thing under groceries: precision to the dollar doesn't matter. If the household purchase is substantial, say a month's worth of laundry detergent and cleaning supplies, split the receipt into two messages: groceries separately, household items separately. That way your statistics will show exactly how much goes to food.
How often should I change my set of categories?
As rarely as possible. Comparing months only makes sense when expenses are sorted the same way each time. If lunches were under "food" in March and moved to "restaurants" in April, the comparison will show growth that never actually happened. It's worth adding a new category when you have a new question to answer, for example you got a dog and want to see what it costs.
Should I split expenses by family member?
Usually not: splitting every expense by person is tedious, and people quickly give up on tracking. The exception is kids: it's useful to see their expenses separately, because they add up quietly, from clothes to classes. Budget has a "Kids" category for this, and expenses like "sneakers for son $35" land there automatically.
Which categories should I check first to save money?
The flexible ones: dining out, shopping, subscriptions and taxis. Fixed expenses like rent change rarely and with difficulty, while flexible ones can be cut back this very month. Compare each of them with last month: whichever category grew the most is your first candidate for savings.
