Categories and Classes Track Income and Expenses

About Categories

Categories are labels you assign to transactions to help you track where your money comes from and where it goes. If you “categorize” your transaction, Quicken can five you insight into your finances through reports, graphs, and budgets. If you are tracking your home finances, you might want reports and graphs that tell you:

• How much you spend each month on things like groceries, utilities, mortgage interest, auto maintenance, medical fees, entertainment, and charity. These items are tracked using expense categories.
• How much you receive each month in salary, bonuses, dividends, interest income, rent from investment properties, and so on. These items are tracked using income categories.

If you assign categories to the transactions you enter in Quicken, you can:

• Generate income- and expense-based reports and graphs that show where your money comes from and how you spend it. See Chapter 15, Creating Reports, on page 171, and Chapter 16, Creating Graphs, on page 189.
• Set up budget amounts for some or all of your categories and create reports or graphs that compare your budget to your actual expenses and income. See “Budgeting” on page 200.
• Save time when preparing your tax returns by generating a list of tax-related income and expenses, or by exporting information to tax-preparation software. See Chapter 18, Getting Ready for Tax Time, on page 217.

You can assign a category to any transaction in any non-investment account in your Quicken data file.* For example, if you write a check for groceries, you would assign the category “Groceries” to the transaction when you enter it in your Quicken checking account register. If you pay for the groceries by credit card, you would also assign the category “Groceries” to the transaction when you enter the transaction in your Quicken credit card account register.

(* Quicken assigns special investment categories to many kinds of investment transactions. See the table that begins on page 148 for more information).

The organization of your categories affects the organization of your reports, graphs, and budgets. If you have a long, detailed category list, your reports and budgets may also be long, but they will be more detailed.

It is important to assign categories and subcategories consistently. For example, if you sometimes assign the category “Auto” to transactions for gasoline, but other times you assign the category and subcategory “Auto: Fuel,” Quicken displays two separate amounts in reports: one for “Auto” transactions and another for “Auto:Fuel” transactions. You can use Quicken’s Replace command to find all occurrences of “Auto” in an account and decide whether or not to recategorize some of them as “Auto:Fuel” (see “Finding a specific transaction” on page 53).

TIP: You’ll get more accurate reports, graphs, and budgets if you categorize credit and charge card purchases the same way you categorize checking account transactions rather than creating a general category like “AmEx” or “Credit Card.” See Chapter 11, Tracking Your Credit Cards, on page 103.

Setting Up Categories and Subcategories

When you started Quicken for the first time, you had the opportunity to include Quicken’s standard home categories, business categories, or both in your Quicken data file. You can use those preset categories as they are or modify them to suit your needs. To display your Category and Transfer list, choose Categories & Transfers from the Lists menu.

TIP: Even if you didn’t choose to include Quicken’s preset categories when you set up your data file, you can import them now. Just choose Categories & Transfers from the Lists menu, choose Import from the File menu, select either the Business Categories or Home Categories file from the Quicken 7 Essentials folder, and click Open.

If you like to get started quickly and learn by trial and error, start by using one of Quicken’s preset category lists, and then add new categories as you work with Quicken. Or, if you prefer to think about exactly how you want to use Quicken to organize your finances, review the preset category lists on page 33 and the modified lists on page 34, and then create your own list.

About Classes

Classes add an additional dimension to reports and graphs by letting you specify where, to what, or to whom transactions apply. Classes do not replace categories. Rather, classes add information to transactions that already have categories. Unlike subcategories, which can only be used with their parent category, classes can be used with any category. Quicken has the flexibility to create reports and graphs based on categories, classes, or both.

You can use classes in situations like these:

• If you share a quicken data file with others in your household, you can create a class for each person. Then, you can track how much each person earns and spends without creating subcategories for each category in the list. For example, two spouses could classify dining expenses as Dining/Leslie and Dining/Marcus and clothing expenses as Clothing/Leslie and Clothing/Marcus.
• If you use your personal checking account for business and personal expenses, you can identify business transactions with the class Business to distinguish them from personal transactions in the same category. For example, you could classify business expenses as Dining/Business, Entertainment/Business and Subscriptions/Business.
• If you manage properties, you can identify transactions by property name or address. For example, six different water bills could be categorized as utility expenses and classified as applying to six different properties.
• If you work with multiple clients, you can identify transactions by client name. Then you can report separately on the income and expenses related to each client.

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