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(Using Departments for Discretionary Expenses in QBO) Part 2 - Using Rules & Recurring Transactions

This guide will show you how to configure your Quickbooks Online settings to automatically flag certain discretionary items.

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Video

Steps

In this section we're going to go over how to:

  1. Update recurring transactions so they always post to the Discretionary department, and

  2. Create rules that automatically assign certain expenses to the Discretionary department.

Step 1: Update Recurring Transactions

Use this for expenses that happen every month and are always discretionary (for example: software subscriptions, streaming services, phone plans).

  1. In QuickBooks Online, open the Accounting menu.

  2. Select Recurring transactions.

  3. Find the recurring transaction you want to mark as discretionary.

  4. Click Edit.

  5. In the Department / Location field, select Discretionary.

  6. Click Save template.

From now on, that transaction will automatically post to the Discretionary department every time it runs.

Step 2: Create Rules to Auto-Assign Discretionary Expenses

  1. Open the Accounting menu.

  2. Select Rules to open up the Rules landing page

  3. Click the New rule button.

  4. Name the rule something clear, such as Discretionary Department.

  5. For Apply this rule to, select Money out (expenses).

  6. Choose which bank or credit card accounts the rule should apply to:

    • Select specific accounts if needed, or

    • Leave All bank accounts selected.

Step 3: Configure the Rule Conditions

  1. Under Conditions, choose:

    • Description

    • Contains

    • Enter a keyword (for example: Amazon)

  2. If you want to include multiple vendors:

    • Change the condition logic from All to Any

    • Click Add a condition

    • Add another rule

This means the rule will apply if the description contains either condition

Step 4: Configure the Action

  1. In the Actions section, click Assign more.

  2. Find Department / Location.

  3. Select Discretionary.

  4. Leave all other fields unchanged.

Only the department should be modified by this rule.

Step 5: Review Auto-Add Settings

  1. Make sure Automatically confirm transactions / Auto-add is turned off.

    • This allows you to still review categories, payees, and other details before posting.

Step 6: Save the Rule

  1. Click Save

    • Going forward, any expense that matches the keywords in this rule will automatically be assigned to the Discretionary department.

Next Step: How to use your discretionary department to customize reports