Categorizing every transaction by hand is the chore that makes people give up on tracking their money. The good news is that spending is repetitive. You shop at the same stores and pay the same services, so a small set of rules can handle most of it.
What a categorization rule is
A rule has two parts:
- A condition: something to match, such as "the description contains COFFEE".
- An action: what to do when it matches, such as "set the category to Eating out".
Once a rule exists, every new transaction that matches gets the category automatically. You fix the exceptions instead of labeling everything.
Step 1: Find the merchants that matter
Open your transactions for the last month or two and sort by merchant or by how often each one appears. The ten or fifteen most frequent names usually cover most of your volume. Start there, not with the long tail.
Step 2: Choose a distinctive piece of the description
Bank descriptions are messy. The same store may appear as an all-caps name, followed by a store number, a city or a processor prefix. The trick is to match the stable part:
- Use the core name, such as a store brand, instead of the whole line.
- Skip store numbers, dates and card digits, which change.
- Avoid very short fragments that could match unrelated merchants. A three-letter match can catch words you did not intend.
If two merchants share a name, add a second condition, for example the account or an amount range.
Step 3: Write the rule
Typical rules look like this:
| If | Then |
|---|---|
| Description contains "grocery brand" | Groceries |
| Description contains "gas station brand" | Transportation |
| Description contains "streaming service" | Subscriptions |
| Amount is more than 1000 and description contains "rent" | Housing |
Keep the rule names descriptive so you can find them later.
Step 4: Think about order
When more than one rule can match, order matters. In many tools the later rule wins. Put your general rules first and your specific exceptions after them, so the specific one overrides the general one. For example, a broad rule sends everything from a big retailer to Shopping, and a later rule sends that retailer's grocery purchases (matched by an amount range or an account) to Groceries.
Step 5: Test before you trust it
Check what a rule would change before you rely on it. A preview shows which existing transactions match, so you can spot an over-eager rule. Look at a handful of matches. If one is wrong, tighten the condition.
Step 6: Review and maintain
Rules are not set-and-forget:
- Look at the uncategorized list weekly and turn repeated merchants into rules.
- Delete rules for merchants you no longer use.
- If a category is renamed or merged, check the rules that point to it.
Rules in KHMYS
KHMYS has a Rules page under Settings. A rule says "If" some Description, Category, Account or Amount matches, "set category to" a category you choose. Text conditions can be contains, is exactly or starts with. Amount conditions can be is more than, is at least, is less than, is at most or equals. Rules apply to new entries in the order listed, later rules can override an earlier category, and Preview shows the effect of one rule before you rely on it.
On the Merchants page, there is also a shortcut to create a rule for a merchant you are looking at. Once your categories behave, the rest of your reports become more trustworthy, because they are built on them. See how to track your spending for the full routine, or try the demo.