After one month all 23 categories sat empty

January is the month many people set up a budget. A new year, a fresh start, and a detailed overview of every single area of spending. Coffee. Lunch. Groceries. Takeaway. Gym. Newspapers. Streaming services. Bus. Parking. Clothes. Shoes. Gifts.

By February most of them are empty.

Not because the money was missing. It simply took too much time and energy to keep the categories up to date. After a week or two, people give up. The budget lives on, but it never gets used.

What happens when you have too many categories

A category is not just a field in an app. It is a promise that you will keep an eye on that area.

If you have 23 categories, you have 23 promises. And every time you import transactions from the bank or add an expense by hand, you have to decide: is this "coffee", "kiosk", "lunch out" or "groceries"? After a few weeks it is more tempting to leave it sitting there than to spend five minutes categorising one receipt.

The problem is not discipline. The problem is the system.

The right number of categories for you

The rule of thumb is simple: a category should have something in it in at least three of every four weeks. If it does not, you probably do not need it as its own category.

The SIFO-referansebudsjett (the Norwegian reference budget for household spending, published by the consumer research institute SIFO at OsloMet) uses 13 broad spending areas. DNB's online budget tool starts with six to eight. That is a good hint that most people manage perfectly well with between seven and twelve categories.

Here is a common example of what can be simplified:

Common mistake: too many categories	Better setup
Coffee, lunch out, takeaway, groceries	Food (with eating out as one extra)
Gym, health, pharmacy	Health and wellbeing
Netflix, Spotify, newspapers, streaming	Subscriptions
Bus, parking, petrol, taxi	Transport
Clothes, shoes, accessories	Clothes and gear
Gifts, flowers, birthdays	Gifts and social

You do not need a category for every shop. You need categories you actually use.

Four moves that make the categories easier to keep

Start with seven. Not eight, not twelve. Set up housing, food, transport, subscriptions, health, clothes and leisure. That covers nearly all spending for most people. The rest you add only if you can see a real need.

Merge whatever you always second guess. If you spend five seconds deciding whether something is "food" or "lunch", that is one category, not two. Combine them.

Delete categories that never get used. Go through the budget after one full month. A category that has been empty two months in a row, you remove. It draws your attention and gives nothing back.

Adjust once, not constantly. Your category system should stay fixed for at least three months at a time. Change it after you have seen two to three months of data, not in the middle of a month. That gives you comparable numbers and stops you rebuilding the budget from scratch every single time.

What matters most is that you actually use it

A budget with five categories that you check regularly is ten times more useful than a budget with 30 categories you never look at. Detail does not give clarity. Use does.

If you use Luma, having clear, broad categories pays off the moment you import transactions from the bank. Categorising then takes seconds instead of minutes, and you end up with a picture of your spending that actually holds up.

Next step: look at the categories you have today. Are there any you could merge? If so, do it now, not next month.