# Categorizing my expenses

January 28, 2012
By

(This article was first published on factbased, and kindly contributed to R-bloggers)

In order to analyse my expenses, a classification scheme is necessary. I need to identify categories that are meaningful to me. I decided to go with the “Classification of Individual Consumption by Purpose” (COICOP), for three reasons:

• It is made by people who have thought more about consumption classification than I ever will.
• It is feasible to assign bank transactions and tracked cash spendings to one of the 12 top level categories.
• It is widely used by statistics divisions, e.g. the Federal Statistical Office of Germany, Eurostat, and the UN. This means I can do social comparisons: In which categories do I spend more money than the average? Do the prices I pay rise faster than the price indices suggest?

So I classified my last year’s expense data according to COICOP. Here is a chart showing the portions of the categories for each month:

For me, the holidays, prepared in August and traveled in September (shown as unknown expenses), are much more dominant than I expected. Except for the new glasses in September I did not make any larger investments.

I like this kind of chart more than stacked bar charts because the history for each category is very visible. This chart is called inkblot chart. I stumbled on it on junk charts, asked how to implement it in R on StackOverflow, and included a revised version in the latest pft package. See below for more information.