Getting started: Step two - Adding categories and categorising transactions

Once transactions have been imported into an account, they'll need to be categorised to get the most out of budgets and reporting.

There are a number of ways to categorise your transactions. Getting your categories to best fit you will be an ongoing process where you can easily refine as you go along.

For details on the different ways to add categories, please see: Adding new categories.

There are a number of different places you can categorise your transactions.

You can categorise transactions manually or using category rules and filters. For more details, see: The different ways to categorise your transactions

With Category Rules, you can set up your PocketSmith account to automatically categorise transactions as they're imported.  

Category Rules work by matching a transaction's merchant name to the merchant keywords belonging to a Category Rule. With this in mind, it's important to edit the merchant keywords for each category rule as you create it so they work effectively.

You can find more on creating Category Rules here: Using Category rules to automatically categorise transactions

Check out this guide to troubleshoot any issues relating to Category Rules: Editing & deleting category rules

If you require more sophisticated auto-categorisation for certain transactions, you can use Filters.

Filters allow you to identify transactions using multiple parameters (merchant description, amount, account, etc.) and then apply categorisation alongside other actions (renaming, marking as transfer, etc.) to any matching transactions.

For detail on using Filters and how to set them up please see: Everything you need to know about filters

PocketSmith allows you to create transfer categories and mark transactions as transfers in order to exclude them from various places around PocketSmith, including income & expense reporting and from the overall budget summary figures.

You can set up multiple transfer categories depending on whether you'd like to budget for or track specific transfers between accounts. For example, you may wish to track Savings transfers separately from Bills transfers or Credit Card repayments, this is especially important when using transfer budgets to forecast into the future,

For more on managing transfers in PocketSmith and creating transfer categories see: Dealing with transfers in PocketSmith

As purchases made on a card are treated as expenses, we recommend treating credit card repayments as transfers to avoid double counting any expenses.

For further detail check out: Managing credit cards within PocketSmith

Mortgage setups for users can vary, and due to PocketSmith's advanced forecasting features, these can be a little tricky to set up in PocketSmith. We've created a guide that details how to track Mortgages, and keep forecasting accurate within PocketSmith.

Check it out here: Managing mortgages within PocketSmith

Bill and scheduled income categories are reflected differently from regular categories on the budget page and in reporting. Treated as transactions paid or received in full in a single transaction, planned spending for bill categories won't be distributed over the category's entire budget period, unlike regular (non-bill) budgets. This means that the full amount for the budget will be included if the date range applied includes the budget repeat date.

For more details, see: Bill and scheduled income categories

There are three category type options, and these determine how income and expense transactions within a category are reported on in PocketSmith reporting and budgets.

Yes, this category can include both income and expenses (default)

A category with this option selected will treat income and expense transactions separately. This means that any income transactions within the category are seen as income, while any expense transactions are seen as expenses.

No, this is an expense category (any income is a refund)

The category will only appear in the expense section of PocketSmith reports. Any income transactions will be treated as a reimbursement, which means that the income amount is deducted from the total expense amount for the category.

No, this is an income category (any expenses are deductions)

When choosing this option, the category and its transactions will only show in income sections of PocketSmith. Any debit transactions that are assigned to this category will be subtracted from the income total.

For more detail on category type options, and to learn how to change them see: Category types in PocketSmith

For the full overview of getting started with PocketSmith and the next stages, please see: Getting started with PocketSmith.