I just finished counting and there are 60 category slots available in YNAB. The other day I received a request to “beef up” YNAB a bit and give a guy another 25 categories. I set him up and he’s on his way. No offense whatsoever intended, but I’d classify him as a Data Geek. (I’m an accountant…definitely the pot calling the kettle black, eh?)
NOTE: YNAB Pro has no limitation on categories. Data geeks can have a ball…
When creating a personal budget, the obvious question to ask yourself is this: how many categories should I use? Ten? Twenty? Fifty? Eighty-five? The short answer is that I have absolutely no idea. If I remember correctly, when I was developing YNAB 2.0, I stopped adding categories when I grew tired of it. I happened to stop at 57. Well, I stuck it out and added three more to get an even 60 categories.
I’d venture to guess that deciding exactly how much of a geek you want to be is an important step in creating your personal budget. Have a look at these two pictures and decide which one fits you the most:
Ah, okay. I’m kidding. I was just dying to use a stock Microsoft photo. I’ve also never seen “Revenge of the Nerds” and don’t plan on it.
There are two important questions you need to ask yourself when you’re deciding just how granular you’d like to be with your personal budget. Creating only a few categories has its advantages and disadvantages. Creating tons of bugeting categories also carries its share of advantages and disadvantages.
Question One: How will I benefit from having this as a separate category?
Perhaps you’re debating the ever-important question:
Should toothpaste have its own category?
Well, if you want to know how much you spend on toothpaste each month, you should use a separate category. Are you curious to know what type of year 2005 was, in terms of toothpaste? Well then, it’s important you track it! Curious to know if your own “basket of goods” price is rising in terms of inflation? You’ll need to know the trend of toothpaste price increases for the past few years in order to extrapolate…
Question Two: Is the added benefit of this category worth the extra hassle?
If that toothpaste information (and countless other data bits, you geek!) is worth the extra hassle of tracking, well then, you’ve found your answer.
The creation of your personal budget need not take several hours. As a matter of fact, I’ve created default categories for you to get started. Change them, add to them, overwrite them to your heart’s content. Just remember to ask yourself those two questions:
1) How much will I benefit from the added information this category will give me?
2) Does the benefit outweigh the hassle?
Contact me in a decade. We’ll compare toothpaste pricing trends.