When you’re creating a budget and tracking expenses, remember to look at the big picture as well as the details. Grouping expenses together and looking at the total for each category helps. Think of your total income as a pie, with each category a slice taken out. (Try the Cash Flow Calculator, which automatically generates a pie chart of how your income is sliced up.)
For example, do you really want to spend 20% of your income on entertainment if that leaves only a 2% sliver for saving for your future?
Grouping your expenses as categories helps you make sure that your spending habits are in line with your priorities, and are helping you to reach your financial goals.