(Using Classes to Track Discretionary Expenses in QBO) - Part 1 - Creating a Class

Video (6 Mins)

Steps

Part 1: Turn On Class Tracking

1. Go to Settings (gear icon).

2. Select Account and Settings.

3. In the left sidebar, click Advanced.

4. Scroll to the Categories section.

5. Turn Track Classes ON.

Optional settings:

• Warn me when a transaction doesn’t have a class
  Leave this OFF if most expenses are non-discretionary.

• Assign classes

  • Select One to each row in transaction if a single transaction might include both discretionary and non-discretionary items (recommended).

  • Select One to entire transaction only if each transaction will always be fully one or the other.

1. Click Save, then Done once settings are saved.

Part 2: Create a Discretionary Class

1. Go back to Settings.

2. Select Lists, then All Lists.

3. Click Classes.

4. Click New.

5. Enter a class name (for example: Discretionary).

6. Click Save.

Part 3: Assign the Discretionary Class to Transactions (Individual Method)

1. Go to Expenses.

2. Select Expenses and Bills, then Expense Transactions.

3. Find a transaction you want to mark as discretionary.

4. Click the transaction to open it.

5. In the Class column:

   • Assign the Discretionary class to the appropriate line item (or the full transaction, depending on your settings).

6. Click Save and Close.

Tip:
To see classes in your transaction list:

1. Click the gear icon above the transactions table.

2. Check Class to display the Class column.

Part 4: Assign the Discretionary Class in Bulk (Recommended for Cleanup)

1. Go to Settings.

2. Open the Reclassify Transactions tool.

3. Set your date range (for example, from the beginning of the year).

4. Filter by Customer/Vendor (choose a vendor that represents discretionary spending).

5. Click Find Transactions.

6. Select:

   • The top checkbox to select all results, or

   • Individual checkboxes for specific transactions.

7. Click Reclassify.

8. In the Change Class dropdown, select Discretionary.

9. Click Apply.

You’ll now see those transactions marked as discretionary in the Class column.

Next Step: Using rules and recurring transactions to automatically assign transactions to the class