Assigning categories to your transactions will allow you to monitor your finances in detail. By categorizing your transactions you will be able to generate detailed cash flow reports and category reports on your income and expenses as well as prepare tax reports based on your tax related categories. Having your transactions detailed with categories will also allow you to keep a budget

Each transaction can be assigned a category that will fall under three general types: income, expense, or transfer. For example, you might categorize your paycheck deposit with the "Salary" category. Categorize filling up your car with gas using the "Auto - Fuel" category, a subcategory on "Auto". For recording account transfers, you can assign the transaction to have the other account's name in brackets such as "[Savings]". If needed, you can split transactions to assign mulitple categories to a transaction.

There may be scenarios where tagging a transaction can be useful in addition to categorizing a transaction. For example, you might not want to have various subcategories on categories for each person in your household. Instead you can have tags for each person in your household and limit the number of categories you need.