Categories aren’t new to personal finance software. A category is just a bucket in which to track spending. You could have categories for Food, Entertainment, Auto, Utilities, and more. I won’t go into great detail here; you can read the Moneydance documentation for more information. I’m going to assume you have a rudimentary understanding of what categories are and how they’re used.
The point of this article is to provide examples of useful categories and subcategories, and some tricks on reporting on them. This is by no means a definitive guide on the subject; rather it’s more of a set of examples to illustrate how I’ve come to use them.
Categories are easy to create. Click on Tools -> Categories from the main menu.
You’ll be presented with a list of existing categories. Moneydance also displays the type (Income or Expense), the balance, and the grand total.
One thing to keep in mind is that categories are really just accounts in category’s clothing. Moneydance presents them as logically different, but functionally they’re the same. But I don’t want to get off-topic here; it’s not important for this purposes of this article. It just explains why there are balances in your categories.
So let’s say you want to track your spending on your car. You can create a category called Auto then, when you spend money on your car, you assign that spending to the Auto category. To create a new category click on the “New” button at the bottom of the box showing your categories.
Click “Next”. Enter the name of the category, plus any comments.
Now that’s fine, if you only ever want to track one car, or if you don’t care how much each car cost you. I want to keep track of how expensive each car is, plus I want to track certain types of spending for each car.
To do this, I’ll select Auto from the list of categories, then go through the category creation process again. This time I’ll create a subcategory called Kia Sorento EX under Auto. A subcategory looks just like a regular category, except that it’s parent is another category (and not the Root account).
Once that’s complete, I’ll then click on Kia Sorento EX from the list of categories, and go through the new category creation process again, creating a subcategory under my subcategory.
I track things like repairs, maintenance, fuel, depreciation, inspections and more for each car, so I’ll run through the creation process until I’ve built all my subcategories. I try to keep my subcategories to no more than four, if possible. When I’m finished I end up with this:
I can now, for example, track how much I spent on repairs for my car for the past year or so. If I’m spending too much, I might decide to buy a new one. I don’t send any money into the parent Auto account, nor the Kia Sorento EX account. I create subaccounts for all my spending, so I can more easily graph it (more on this below). In this case the parent accounts become more like category groups.
So now I want to make a useful graph in order to visualize my spending on my Kia. Let’s say I want to see how much it’s cost me over the past twelve months. I can create a graph with a pie chart showing the distribution of spending between my subaccouts, along with a line chart showing the spending totals by subcategory per month.
To create this graph I’ll first select Tools -> Graphs and Reports from the main menu.
You’ll be presented with a list of available graphs and reports. Click the Expenses graph. Change the Date dropdown to Last 12 months, then deselect the Show Top option. Leaving this checked will show the top N number of expenses; we want to explicitly choose ours. I’ll also choose to group this by month.
Click the “None” button to clear any pre-selected categories, then scroll down to your newly-created subcategories.
Here’s where we select our subcategories for the graph. Graphing will automatically rollup, so you only want to check the subcategories at the same level. In other words, selecting Kia Sorento EX by itself will sum to the same total as all the subcategories underneath it. Of course then you wouldn’t be able to see how the expenses break out. If you include the parent, you’ll overstate. Again, this report is only to show us the distribution of expenses within the subcategories under Kia Sorento EX.
When we click “Generate” we see the report.
So what I’ve done now is create a graph that shows me the distribution of expenses for my Kia Sorento over the past 12 completed months. The “stacked” option shows effectively “unrolls” the pie chart above onto a period with intervals below. If you uncheck the “stacked” option, you’ll get a simple line chart:
You may find this more to your liking. I haven’t found any use for the “cumulative” option.
Now I want to save this report so I can run it again, right from the Moneydance home page, with a single click. I’ve chosen a dynamic date range (last 12 months) which is relative to the time I’m running the report. It’ll always give me the last twelve completed months relative to the current month.
Click on “Memorize” at the bottom of the report. You’ll br presented with this box:
Give your report a name you’ll remember, then click “OK”.
I prefix my reports with a “group” name so they’ll sort together on the home page. I have four distinct groupings: INCOME & EXPENSE, NET WORTH, RETIRMENT & INVESTING, and BUDGETING.
Now that you’ve memorized the report you can easily rerun it from the Moneydance home page.
I find that categorizing things in this fashion allows me the ability to track expenses at a very granular level. I can keep things simple by budgeting at the parent category, while still tracking the lower-level expense distribution.
I can also re-create this for any kind of spending category, reproducing the same type of graphing. I could do this for Utilities (electric, phone, gas, trash, water), for Food (Dining Out, Grocery, Snacks), or most anything else. You can memorize reports for all of these groups of subcategories, so you won’t have to build them from scratch each month. The software provides you the ability to be as general or specific as you want when tracking expenses, along with the ability to create some useful graphs.
I hope this article gave you some ideas on how to utilize categories in Moneydance. Good luck.
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