How are categories chosen when I download transactions and how can I change them?

jeff.hecht

For the past few months when I download transactions, many of the categories that Quicken automatically enters are spurious. For example, a payment to a Dr. Kaplan — foot doctor — was listed in the Education category. Purchases at Keyes Drug are listed as "Bills & Utilities: Mobile Phone." A utility payment through a bank's online service was listed as "Transfer:Credit Card Payment." Payment to "In Smyle Dental" (a dentist) was listed under "Gifts & Donations." Payment to a large grocery store is listed as "Food & Dining:Coffee Shops." In some cases the names downloaded for the stores have been changed as well, so categories I had chosen ("Groceries" for the larger grocery store) got changed. This is messing up my acounting and tax records. What is going on and can it be changed?

jacobs

The exact operation of Quicken's server-based automatic categorization remains a dark secret, and all you can control is turning it off entirely (in Settings > Connected Services). But you can use other strategies to avoid mis-categorizations going forward. For most people, a lot of Payees are regularly recurring, and it makes sense to create a QuickFill rule to memorize which default category to use for a particular Payee. When you edit the category of a transaction check the little pop-up checkbox to "Save QuickFill rule for this Payee with category":

The next time you manually enter or download a transaction for this Payee, Quicken will apply your local categorization (QuickFill) rule. You can alternatively create QuickFill rules for your most-used Payees by going to Window > Payees & Rules. You can skim through and look for regular Payees you want to create a QuickFill rule for, or you can click on the Uses column to sort the list of Payees from most-used to least-used, and focus on the most-used ones you still use regularly. While it might seem too daunting to try to create 50 or 100 or more QuickFill rules all at once, if you just save a QuickFill rule as you edit/correct downloaded transactions over the next month, you won't be spending more time than you are currently to edit the transactions, and you'll be building up a library of QuickFill rules which will be applied in the future so you won't have to correct the categories going forward.

One quick additional note: if the Payee names download differently each time (e.g. "Walmart #1234" and "Walmart #9876"), you can create a renaming rule such that if the Statement name contains Walmart, the Payee name should be set to Walmart. Then you can have a QuickFill rule for the Payee Walmart to categorize purchases as Groceries.

jacobs

The exact operation of Quicken's server-based automatic categorization remains a dark secret, and all you can control is turning it off entirely (in Settings > Connected Services). But you can use other strategies to avoid mis-categorizations going forward. For most people, a lot of Payees are regularly recurring, and it makes sense to create a QuickFill rule to memorize which default category to use for a particular Payee. When you edit the category of a transaction check the little pop-up checkbox to "Save QuickFill rule for this Payee with category":

The next time you manually enter or download a transaction for this Payee, Quicken will apply your local categorization (QuickFill) rule. You can alternatively create QuickFill rules for your most-used Payees by going to Window > Payees & Rules. You can skim through and look for regular Payees you want to create a QuickFill rule for, or you can click on the Uses column to sort the list of Payees from most-used to least-used, and focus on the most-used ones you still use regularly. While it might seem too daunting to try to create 50 or 100 or more QuickFill rules all at once, if you just save a QuickFill rule as you edit/correct downloaded transactions over the next month, you won't be spending more time than you are currently to edit the transactions, and you'll be building up a library of QuickFill rules which will be applied in the future so you won't have to correct the categories going forward.

One quick additional note: if the Payee names download differently each time (e.g. "Walmart #1234" and "Walmart #9876"), you can create a renaming rule such that if the Statement name contains Walmart, the Payee name should be set to Walmart. Then you can have a QuickFill rule for the Payee Walmart to categorize purchases as Groceries.

jeff.hecht

Very interesting. I had thought that "transaction categories" were standardized in some ways, but comparing Quicken's with those from Bank of America showed that they were not standards, and that the categories are chosen to meet the needs of the companies using them. I found a more detailed and informative description at https://www.docuclipper.com/blog/how-to-categorize-transactions/

I have not used Quick Fill rules yet, and will have to look at them. They may be useful in making my transaction categories to help me track our spending and assist in tax preparation. Thanks for mentioning them.

jacobs

There is no such thing as "standard" categories for personal expenses. Every personal finance program and financial institution website uses their own set of categories. Some people use mostly Quicken's default set of categories, most people use a mix of Quicken's defaults and their own categories, and I've seen some people use some radically different category systems. 😀 Only Quicken's default categories will be used by the server-based automatic categorization process.

My advice to most people is not to over-complicate categories. It can be tempting to create separate categories and sub-categories for lots of things, but the question you need to ask yourself is: "how will I make use of the differentiation of all these categories and sub-categories?" Keep in mind that in Quicken you can click on any category in a report (or budget) and see a drill-down report showing the transactions in the category, so you may not need as many categories as you might be inclined to create. If your annual expenses are not in the multiple millions of dollars, you probably don't need hundreds of categories. (And if your annual expenses are in the multiple millions of dollars, you probably aren't a typical Quicken user!)

jeff.hecht

When I first saw the new categories in Quicken, I somehow got the impression they were a standard adopted by some group. Thanks for the clarification.

I agree that most of us don't need too many categories. In fact, I think Quicken now has too many categories. What bothers me is having to change transactions back to the categories I was using, and the clearly incorrect categories for some transactions, like the drug story (with "Drug" in its name) listed as mobile phone payments.