Wish farm all the way! Or emergency fund, if you haven't got one.
BTW with the extra clothing, sunscreen etc - it would be useful to tag all of these and then after the holiday, work out the amount spent here and add that amount to next year's holiday fund as "pre-holiday spends" or so on.
WRT categories I've had a couple of big shake ups over the time I've been using YNAB and at first I wanted to break everything down. Over time I've found it's more useful to combine categories where possible. I only break out a category onto its own line for the following reasons.
- Very different spending patterns - e.g. I separated out teenager clothes from younger kids' clothes. Because without this, I would go into clothing shops and happily spend the whole budget on cute tiny things and then the teenager would have a growth spurt and want a new wardrobe all at once, so I halved it and put it into each. That means that his tends to build up until he's got €100 or so in there and then he goes and spends it all at once. Whereas for the younger kids, I spend €10 here and there and fritter it in little bits as and when I see things I like for them.
- Ringfencing funds - if I want money to be kept separate and not spent on whatever else the category covers.
- Track spending - when we're trying not to go over a certain max spend e.g. McDonalds
or if I want to see how much something costs us on average e.g. DH's vaping stuff.
- Direct debits - these all get their own category. Occasionally something gets wrapped into one e.g. for the kids' nursery, it technically comes out as two payments, but since they are both monthly and fixed I just have the one category, it doesn't make sense to have two. Anything less often than monthly (quarterly, yearly) has its own category. It gets too complicated to try and fund otherwise.
- Save-to-spend categories (like Christmas, birthdays, holidays, wish farm etc)
I have master categories for:
- Basic survival essentials (rent, utilities, food, medical)
- Income creating/protecting (childcare, adult clothing, public transport)
- Child-related expenses which aren't in one of the above
- Financial-related stuff (debts, fees, fines, insurance)
- Car-related costs
- Luxuries/fun stuff
- Personal Luxuries (pocket money, individual funds, gift money which has come in as a transfer before the actual birthday/Christmas)
- Savings
I like the car, child, and income-creating stuff to be separated out - hard to explain why - it helps me see (and therefore, appreciate!) these as lifestyle choices we have made, rather than just incidental costs of living that we didn't have any choice in if that makes sense?
(Income creating is "this is absolutely necessary in order to keep a job, but arguably a luxury otherwise".)
If you use the web version on Chrome, the Toolkit for YNAB extension is good as it gives you extra reports which I like. I often use the spending by payee one which helps divide categories down further. At the end of the year I do a little run down and comparison with the previous year :D