When to use subcategories

When using Microsoft Money, there are many ways on categorizing transactions.

Let’s say I bought Pepsi, cheese, tea, cake, soap & ice cream. They were all paid to the same payee, so can be entered as one transaction.

You can categorize these in a couple of ways:
  1. Use a split transaction, listing each of the item and a separate subcategory until Groceries
  2. Don't use a split transaction and categorize everything using the category Groceries
  3. Use a split transaction and categorize some as Groceries and others using a subcategory of groceries.
If you need to get reports about each item, then you'll need to use the first option and subcategorize everything. This is quite a lot of work, however if you later decide that you no longer need to track certain subcategories, you can easily delete them, moving all subcategory data back to the category level (eg Groceries:Soap can be simply renamed to Groceries).

By adding a subcategory for each item, you will end up with a huge list of subcategories.

If you do not require this level of detail, then I'd adopt either the second or third option above - in my own file, I track Groceries at the category level, but with a single subcategory of Alcohol/Liquor so I can see how much is being spent on that.

Thanks to Ahmad Zayed for the question which prompted this article

Category: Planning

Keywords: Category, Split, Subcategory

Support | About the author | Sitemap | Blog | Contact Me |
This site is provided without any employment or contractual obligation with Microsoft Corporation.
Copyright © Glyn Simpson 1998-2017. All rights reserved.