diff --git a/.gitignore b/.gitignore
index 3a5c722..429e471 100644
--- a/.gitignore
+++ b/.gitignore
@@ -1,23 +1,21 @@
 # Mac
 .DS_Store
 
-# Application
+# Project management
+.my_project/
+.cursor/
 real_data/
-my_notes.txt
-notes.txt
+
+# Application
 *log.*
-.vite/
-notes/
 
 # Frontend
 frontend/coverage/
+.vite/
 
 # CSV files - ignore purchases.csv but keep sample data
 *-purchases.csv
 
-# Cursor
-.cursor/
-
 # Byte-compiled / optimized / DLL files
 __pycache__/
 *.py[cod]
diff --git a/backend/pytest.ini b/backend/pytest.ini
new file mode 100644
index 0000000..fcccae1
--- /dev/null
+++ b/backend/pytest.ini
@@ -0,0 +1,2 @@
+[pytest]
+pythonpath = src
diff --git a/backend/src/crud.py b/backend/src/crud.py
index 9aea6ec..91cc24e 100644
--- a/backend/src/crud.py
+++ b/backend/src/crud.py
@@ -77,7 +77,7 @@ def get_users(db: Session, skip: int = 0, limit: int = 100) -> List[User]:
 
 def create_user(db: Session, user: UserCreate) -> User:
     # Sanitize input
-    user_data = user.dict()
+    user_data = user.model_dump()
     user_data['username'] = sanitize_input(user_data['username'])
     user_data['email'] = sanitize_input(user_data['email'])
     
@@ -90,7 +90,7 @@ def create_user(db: Session, user: UserCreate) -> User:
 def update_user(db: Session, user_id: UUID, user: UserUpdate) -> Optional[User]:
     db_user = get_user(db, user_id)
     if db_user:
-        update_data = user.dict(exclude_unset=True)
+        update_data = user.model_dump(exclude_unset=True)
         for field, value in update_data.items():
             setattr(db_user, field, value)
         db.commit()
@@ -134,7 +134,7 @@ def get_or_create_category(db: Session, category_name: str) -> Category:
 
 def create_category(db: Session, category: CategoryCreate) -> Category:
     # Sanitize input
-    category_data = category.dict()
+    category_data = category.model_dump()
     category_data['category_name'] = sanitize_input(category_data['category_name'])
     
     db_category = Category(**category_data)
@@ -146,7 +146,7 @@ def create_category(db: Session, category: CategoryCreate) -> Category:
 def update_category(db: Session, category_id: UUID, category: CategoryUpdate) -> Optional[Category]:
     db_category = get_category(db, category_id)
     if db_category:
-        update_data = category.dict(exclude_unset=True)
+        update_data = category.model_dump(exclude_unset=True)
         for field, value in update_data.items():
             setattr(db_category, field, value)
         db.commit()
@@ -181,7 +181,7 @@ def get_expenses(
 
 def create_expense(db: Session, expense: ExpenseCreate) -> Expense:
     # Sanitize input
-    expense_data = expense.dict()
+    expense_data = expense.model_dump()
     expense_data['item'] = sanitize_input(expense_data['item'])
     expense_data['vendor'] = sanitize_input(expense_data['vendor'])
     if expense_data.get('payment_method'):
@@ -214,7 +214,7 @@ def create_expense(db: Session, expense: ExpenseCreate) -> Expense:
 def update_expense(db: Session, expense_id: UUID, expense: ExpenseUpdate) -> Optional[Expense]:
     db_expense = get_expense(db, expense_id)
     if db_expense:
-        update_data = expense.dict(exclude_unset=True)
+        update_data = expense.model_dump(exclude_unset=True)
         
         # Extract new categories before updating expense
         new_categories = update_data.pop('new_categories', []) or []
@@ -335,7 +335,7 @@ def get_wishlist_items(
     return query.order_by(Wishlist.priority).offset(skip).limit(limit).all()
 
 def create_wishlist_item(db: Session, wishlist_item: WishlistCreate) -> Wishlist:
-    db_wishlist_item = Wishlist(**wishlist_item.dict())
+    db_wishlist_item = Wishlist(**wishlist_item.model_dump())
     db.add(db_wishlist_item)
     db.commit()
     db.refresh(db_wishlist_item)
@@ -344,7 +344,7 @@ def create_wishlist_item(db: Session, wishlist_item: WishlistCreate) -> Wishlist
 def update_wishlist_item(db: Session, wish_id: UUID, wishlist_item: WishlistUpdate) -> Optional[Wishlist]:
     db_wishlist_item = get_wishlist_item(db, wish_id)
     if db_wishlist_item:
-        update_data = wishlist_item.dict(exclude_unset=True)
+        update_data = wishlist_item.model_dump(exclude_unset=True)
         for field, value in update_data.items():
             setattr(db_wishlist_item, field, value)
         db.commit()
@@ -397,7 +397,7 @@ def create_budget(db: Session, budget: BudgetCreate) -> Budget:
     is_over_max = total_spend > budget.max_spend
     
     # Create budget with calculated values
-    budget_data = budget.dict()
+    budget_data = budget.model_dump()
     budget_data['current_spend'] = current_spend
     budget_data['future_spend'] = future_spend
     budget_data['is_over_max'] = is_over_max
@@ -413,7 +413,7 @@ def create_budget(db: Session, budget: BudgetCreate) -> Budget:
 def update_budget(db: Session, budget_id: UUID, budget: BudgetUpdate) -> Optional[Budget]:
     db_budget = get_budget(db, budget_id)
     if db_budget:
-        update_data = budget.dict(exclude_unset=True)
+        update_data = budget.model_dump(exclude_unset=True)
         
         # Recalculate current spend if category or user changed
         if 'category_id' in update_data or 'user_id' in update_data:
@@ -469,12 +469,18 @@ def get_total_expenses_in_date_range(db: Session, user_id: Optional[UUID] = None
     return result or 0.0
 
 def get_expenses_by_category(db: Session, user_id: Optional[UUID] = None) -> List[dict]:
-    query = db.query(
-        Category.category_name,
-        func.sum(Expense.price).label('total')
-    ).join(ExpenseCategory).join(Expense)
-    
+    """Aggregate expenses by category with explicit join path to avoid ambiguity."""
+    query = (
+        db.query(
+            Category.category_name,
+            func.sum(Expense.price).label('total')
+        )
+        .select_from(Category)
+        .join(ExpenseCategory, ExpenseCategory.category_id == Category.category_id)
+        .join(Expense, Expense.expense_id == ExpenseCategory.expense_id)
+    )
+
     if user_id:
         query = query.filter(Expense.user_id == user_id)
-    
+
     return query.group_by(Category.category_id, Category.category_name).all()
\ No newline at end of file
diff --git a/backend/src/database.py b/backend/src/database.py
index cfc278e..fa2e870 100644
--- a/backend/src/database.py
+++ b/backend/src/database.py
@@ -1,6 +1,5 @@
 from sqlalchemy import create_engine
-from sqlalchemy.ext.declarative import declarative_base
-from sqlalchemy.orm import sessionmaker
+from sqlalchemy.orm import sessionmaker, declarative_base
 import os
 
 # Database URL from environment variable
diff --git a/backend/src/models.py b/backend/src/models.py
index 7a817a6..fb64714 100644
--- a/backend/src/models.py
+++ b/backend/src/models.py
@@ -30,7 +30,7 @@ class Category(Base):
     # Relationships
     expense_categories = relationship("ExpenseCategory", back_populates="category")
     budgets = relationship("Budget", back_populates="category")
-    expenses = relationship("Expense", secondary="expense_categories", back_populates="categories")
+    expenses = relationship("Expense", secondary="expense_categories", back_populates="categories", overlaps="expense_categories")
 
 class Expense(Base):
     __tablename__ = "expenses"
@@ -47,8 +47,8 @@ class Expense(Base):
     
     # Relationships
     user = relationship("User", back_populates="expenses")
-    expense_categories = relationship("ExpenseCategory", back_populates="expense")
-    categories = relationship("Category", secondary="expense_categories", back_populates="expenses")
+    expense_categories = relationship("ExpenseCategory", back_populates="expense", overlaps="expenses")
+    categories = relationship("Category", secondary="expense_categories", back_populates="expenses", overlaps="expense_categories")
 
 class ExpenseCategory(Base):
     __tablename__ = "expense_categories"
diff --git a/backend/src/schemas.py b/backend/src/schemas.py
index e3ebffb..343355d 100644
--- a/backend/src/schemas.py
+++ b/backend/src/schemas.py
@@ -1,4 +1,4 @@
-from pydantic import BaseModel, Field, validator, EmailStr
+from pydantic import field_validator, ConfigDict, BaseModel, Field, validator, EmailStr
 from typing import Optional, List
 from datetime import datetime, date
 from uuid import UUID
@@ -8,7 +8,7 @@
 class UserBase(BaseModel):
     username: str = Field(..., min_length=3, max_length=50, pattern=r'^[a-zA-Z0-9_]+$')
     email: EmailStr
-    role: str = Field(..., pattern=r'^(regular|admin)$', strip_whitespace=True)
+    role: str = Field(..., pattern=r'^(regular|admin)$', json_schema_extra={'strip_whitespace': True})
 
 class UserCreate(UserBase):
     password_hash: str = Field(..., min_length=60, max_length=73)  # bcrypt hash length
@@ -16,22 +16,21 @@ class UserCreate(UserBase):
 class UserUpdate(UserBase):
     username: Optional[str] = Field(None, min_length=3, max_length=50, pattern=r'^[a-zA-Z0-9_]+$')
     email: Optional[EmailStr] = None
-    role: Optional[str] = Field(None, pattern=r'^(regular|admin)$', strip_whitespace=True)
+    role: Optional[str] = Field(None, pattern=r'^(regular|admin)$', json_schema_extra={'strip_whitespace': True})
     password_hash: Optional[str] = Field(None, min_length=60, max_length=73)
 
 class User(UserBase):
     user_id: UUID
     created_at: datetime
     last_login: datetime
-    
-    class Config:
-        from_attributes = True
+    model_config = ConfigDict(from_attributes=True)
 
 # Category schemas
 class CategoryBase(BaseModel):
-    category_name: str = Field(..., min_length=1, max_length=100, strip_whitespace=True)
+    category_name: str = Field(..., min_length=1, max_length=100, json_schema_extra={'strip_whitespace': True})
     
-    @validator('category_name')
+    @field_validator('category_name')
+    @classmethod
     def validate_category_name(cls, v):
         # Remove any potentially dangerous characters
         v = re.sub(r'[<>"\']', '', v)
@@ -41,24 +40,23 @@ class CategoryCreate(CategoryBase):
     pass
 
 class CategoryUpdate(CategoryBase):
-    category_name: Optional[str] = Field(None, min_length=1, max_length=100, strip_whitespace=True)
+    category_name: Optional[str] = Field(None, min_length=1, max_length=100, json_schema_extra={'strip_whitespace': True})
 
 class Category(CategoryBase):
     category_id: UUID
-    
-    class Config:
-        from_attributes = True
+    model_config = ConfigDict(from_attributes=True)
 
 # Expense schemas
 class ExpenseBase(BaseModel):
-    item: str = Field(..., min_length=1, max_length=255, strip_whitespace=True)
-    vendor: str = Field(..., min_length=1, max_length=255, strip_whitespace=True)
+    item: str = Field(..., min_length=1, max_length=255, json_schema_extra={'strip_whitespace': True})
+    vendor: str = Field(..., min_length=1, max_length=255, json_schema_extra={'strip_whitespace': True})
     price: float = Field(..., gt=0, le=999999.99)  # Positive price with reasonable limit
     date_purchased: date
-    payment_method: Optional[str] = Field(None, max_length=100, strip_whitespace=True)
-    notes: Optional[str] = Field(None, max_length=1000, strip_whitespace=True)
+    payment_method: Optional[str] = Field(None, max_length=100, json_schema_extra={'strip_whitespace': True})
+    notes: Optional[str] = Field(None, max_length=1000, json_schema_extra={'strip_whitespace': True})
     
-    @validator('item', 'vendor', 'payment_method', 'notes')
+    @field_validator('item', 'vendor', 'payment_method', 'notes')
+    @classmethod
     def validate_text_fields(cls, v):
         if v is not None:
             # Remove potentially dangerous characters
@@ -71,12 +69,12 @@ class ExpenseCreate(ExpenseBase):
     new_categories: Optional[List[str]] = Field(None, description="List of new category names to create")
 
 class ExpenseUpdate(ExpenseBase):
-    item: Optional[str] = Field(None, min_length=1, max_length=255, strip_whitespace=True)
-    vendor: Optional[str] = Field(None, min_length=1, max_length=255, strip_whitespace=True)
+    item: Optional[str] = Field(None, min_length=1, max_length=255, json_schema_extra={'strip_whitespace': True})
+    vendor: Optional[str] = Field(None, min_length=1, max_length=255, json_schema_extra={'strip_whitespace': True})
     price: Optional[float] = Field(None, gt=0, le=999999.99)
     date_purchased: Optional[date] = None
-    payment_method: Optional[str] = Field(None, max_length=100, strip_whitespace=True)
-    notes: Optional[str] = Field(None, max_length=1000, strip_whitespace=True)
+    payment_method: Optional[str] = Field(None, max_length=100, json_schema_extra={'strip_whitespace': True})
+    notes: Optional[str] = Field(None, max_length=1000, json_schema_extra={'strip_whitespace': True})
     new_categories: Optional[List[str]] = Field(None, description="List of new category names to create")
 
 class Expense(ExpenseBase):
@@ -84,9 +82,7 @@ class Expense(ExpenseBase):
     user_id: UUID
     created_at: datetime
     categories: Optional[List[Category]] = []
-    
-    class Config:
-        from_attributes = True
+    model_config = ConfigDict(from_attributes=True)
 
 # ExpenseCategory schemas
 class ExpenseCategoryBase(BaseModel):
@@ -97,20 +93,20 @@ class ExpenseCategoryCreate(ExpenseCategoryBase):
     pass
 
 class ExpenseCategory(ExpenseCategoryBase):
-    class Config:
-        from_attributes = True
+    model_config = ConfigDict(from_attributes=True)
 
 # Wishlist schemas
 class WishlistBase(BaseModel):
-    item: str = Field(..., min_length=1, max_length=255, strip_whitespace=True)
-    vendor: Optional[str] = Field(None, max_length=255, strip_whitespace=True)
+    item: str = Field(..., min_length=1, max_length=255, json_schema_extra={'strip_whitespace': True})
+    vendor: Optional[str] = Field(None, max_length=255, json_schema_extra={'strip_whitespace': True})
     price: float = Field(..., gt=0, le=999999.99)
     priority: int = Field(..., ge=1, le=10)  # Priority 1-10
     status: str = Field(..., pattern=r'^(wished|scheduled|bought)$')
-    notes: Optional[str] = Field(None, max_length=1000, strip_whitespace=True)
+    notes: Optional[str] = Field(None, max_length=1000, json_schema_extra={'strip_whitespace': True})
     planned_date: Optional[date] = None
     
-    @validator('item', 'vendor', 'notes')
+    @field_validator('item', 'vendor', 'notes')
+    @classmethod
     def validate_text_fields(cls, v):
         if v is not None:
             v = re.sub(r'[<>"\']', '', v)
@@ -121,12 +117,12 @@ class WishlistCreate(WishlistBase):
     user_id: UUID
 
 class WishlistUpdate(WishlistBase):
-    item: Optional[str] = Field(None, min_length=1, max_length=255, strip_whitespace=True)
-    vendor: Optional[str] = Field(None, max_length=255, strip_whitespace=True)
+    item: Optional[str] = Field(None, min_length=1, max_length=255, json_schema_extra={'strip_whitespace': True})
+    vendor: Optional[str] = Field(None, max_length=255, json_schema_extra={'strip_whitespace': True})
     price: Optional[float] = Field(None, gt=0, le=999999.99)
     priority: Optional[int] = Field(None, ge=1, le=10)
     status: Optional[str] = Field(None, pattern=r'^(wished|scheduled|bought)$')
-    notes: Optional[str] = Field(None, max_length=1000, strip_whitespace=True)
+    notes: Optional[str] = Field(None, max_length=1000, json_schema_extra={'strip_whitespace': True})
     planned_date: Optional[date] = None
 
 class Wishlist(WishlistBase):
@@ -134,9 +130,7 @@ class Wishlist(WishlistBase):
     user_id: UUID
     created_at: Optional[datetime] = None
     user: Optional[User] = None
-    
-    class Config:
-        from_attributes = True
+    model_config = ConfigDict(from_attributes=True)
 
 # Budget schemas
 class BudgetBase(BaseModel):
@@ -148,13 +142,17 @@ class BudgetBase(BaseModel):
     timeframe_interval: Optional[int] = Field(None, ge=1, le=100)
     recurring_start_date: Optional[date] = None
     
-    @validator('end_date')
+    # TODO[pydantic]: We couldn't refactor the `validator`, please replace it by `field_validator` manually.
+    # Check https://docs.pydantic.dev/dev-v2/migration/#changes-to-validators for more information.
+    @field_validator('end_date')
     def validate_date_range(cls, v, values):
         if 'start_date' in values and v <= values['start_date']:
             raise ValueError('end_date must be after start_date')
         return v
     
-    @validator('timeframe_interval')
+    # TODO[pydantic]: We couldn't refactor the `validator`, please replace it by `field_validator` manually.
+    # Check https://docs.pydantic.dev/dev-v2/migration/#changes-to-validators for more information.
+    @field_validator('timeframe_interval')
     def validate_timeframe_interval(cls, v, values):
         if 'timeframe_type' in values and values['timeframe_type'] != 'custom' and v is None:
             raise ValueError('timeframe_interval is required for non-custom timeframes')
@@ -181,6 +179,4 @@ class Budget(BudgetBase):
     category_id: UUID
     current_spend: float = Field(..., ge=0, le=999999.99)
     future_spend: float = Field(..., ge=0, le=999999.99)
-    
-    class Config:
-        from_attributes = True 
\ No newline at end of file
+    model_config = ConfigDict(from_attributes=True)
\ No newline at end of file
diff --git a/backend/src/test_api.py b/backend/src/test_api.py
deleted file mode 100644
index 132d44e..0000000
--- a/backend/src/test_api.py
+++ /dev/null
@@ -1,116 +0,0 @@
-#!/usr/bin/env python3
-"""
-Simple test script to verify the FastAPI endpoints
-Run this after starting the services with: docker compose up -d
-"""
-
-import requests
-import json
-from datetime import datetime, date
-import uuid
-
-BASE_URL = "http://localhost:8001"
-
-def test_health():
-    print("Testing health endpoint...")
-    response = requests.get(f"{BASE_URL}/health")
-    print(f"Status: {response.status_code}")
-    print(f"Response: {response.json()}")
-    print()
-
-def test_user():
-    print("Testing user endpoints...")
-    user_data = {
-        "username": "testuser",
-        "email": "testuser@example.com",
-        "role": "regular",
-        "password_hash": "fakehash123"
-    }
-    response = requests.post(f"{BASE_URL}/users/", json=user_data)
-    print(f"Create user status: {response.status_code}")
-    if response.status_code == 201:
-        user = response.json()
-        print(f"Created user: {user}")
-        return user["user_id"]
-    else:
-        print(f"Error creating user: {response.text}")
-        return None
-
-def test_categories():
-    print("Testing category endpoints...")
-    category_data = {
-        "category_name": "Food & Dining"
-    }
-    response = requests.post(f"{BASE_URL}/categories/", json=category_data)
-    print(f"Create category status: {response.status_code}")
-    if response.status_code == 201:
-        category = response.json()
-        print(f"Created category: {category}")
-        category_id = category['category_id']
-        # Get all categories
-        response = requests.get(f"{BASE_URL}/categories/")
-        print(f"Get categories status: {response.status_code}")
-        print(f"Categories: {response.json()}")
-        # Update category
-        update_data = {"category_name": "Updated Food & Dining"}
-        response = requests.put(f"{BASE_URL}/categories/{category_id}", json=update_data)
-        print(f"Update category status: {response.status_code}")
-        return category_id
-    else:
-        print(f"Error creating category: {response.text}")
-        return None
-
-def test_expenses(user_id, category_id):
-    print("\nTesting expense endpoints...")
-    # Create an expense
-    expense_data = {
-        "item": "Lunch at Chipotle",
-        "vendor": "Chipotle",
-        "price": 25.50,
-        "date_purchased": date.today().isoformat(),
-        "user_id": user_id,
-        "payment_method": "credit card",
-        "notes": "Delicious burrito bowl"
-    }
-    response = requests.post(f"{BASE_URL}/expenses/", json=expense_data)
-    print(f"Create expense status: {response.status_code}")
-    if response.status_code == 201:
-        expense = response.json()
-        print(f"Created expense: {expense}")
-        expense_id = expense['expense_id']
-        # Link expense to category
-        response = requests.post(f"{BASE_URL}/expenses/{expense_id}/categories/{category_id}")
-        print(f"Link expense to category status: {response.status_code}")
-        # Get all expenses
-        response = requests.get(f"{BASE_URL}/expenses/")
-        print(f"Get expenses status: {response.status_code}")
-        print(f"Expenses: {response.json()}")
-        # Get analytics
-        response = requests.get(f"{BASE_URL}/analytics/total")
-        print(f"Total expenses: {response.json()}")
-        response = requests.get(f"{BASE_URL}/analytics/by-category")
-        print(f"Expenses by category: {response.json()}")
-        return expense_id
-    else:
-        print(f"Error creating expense: {response.text}")
-        return None
-
-def main():
-    print("Starting API tests...")
-    print("=" * 50)
-    try:
-        test_health()
-        user_id = test_user()
-        category_id = test_categories()
-        if user_id and category_id:
-            test_expenses(user_id, category_id)
-        print("=" * 50)
-        print("Tests completed!")
-    except requests.exceptions.ConnectionError:
-        print("Error: Could not connect to the API. Make sure the services are running with:")
-        print("docker compose up -d")
-    except Exception as e:
-        print(f"Error during testing: {e}")
-
-if __name__ == "__main__":
-    main() 
\ No newline at end of file
diff --git a/backend/test/requirements.txt b/backend/test/requirements.txt
new file mode 100644
index 0000000..bd5f874
--- /dev/null
+++ b/backend/test/requirements.txt
@@ -0,0 +1,29 @@
+annotated-types==0.7.0
+anyio==4.11.0
+certifi==2025.10.5
+charset-normalizer==3.4.3
+click==8.3.0
+dnspython==2.8.0
+email-validator==2.3.0
+fastapi==0.118.0
+greenlet==3.2.4
+h11==0.16.0
+httpcore==1.0.9
+httpx==0.28.1
+idna==3.10
+iniconfig==2.1.0
+packaging==25.0
+pluggy==1.6.0
+psycopg2-binary==2.9.10
+pydantic==2.12.0
+pydantic_core==2.41.1
+Pygments==2.19.2
+pytest==8.4.2
+requests==2.32.5
+sniffio==1.3.1
+SQLAlchemy==2.0.43
+starlette==0.48.0
+typing-inspection==0.4.2
+typing_extensions==4.15.0
+urllib3==2.5.0
+uvicorn==0.37.0
diff --git a/backend/test/test_api.py b/backend/test/test_api.py
new file mode 100644
index 0000000..708a265
--- /dev/null
+++ b/backend/test/test_api.py
@@ -0,0 +1,185 @@
+#!/usr/bin/env python3
+"""
+Pytest API tests using FastAPI TestClient bound to a test database on port 5433.
+Requires the test Postgres in compose.test.yaml to be running (docker compose -f compose.test.yaml up -d).
+"""
+
+import os
+from datetime import date
+
+import pytest
+from fastapi.testclient import TestClient
+from sqlalchemy import create_engine, event
+from sqlalchemy.orm import sessionmaker
+
+# Import app and DB utilities from the backend src
+from main import app  # ensure PYTHONPATH includes backend/src when running pytest
+from database import Base, get_db
+
+
+# Configure test database (port 5433)
+POSTGRES_PASSWORD = os.getenv("POSTGRES_PASSWORD", "password")
+TEST_DATABASE_URL = os.getenv(
+    "TEST_DATABASE_URL",
+    f"postgresql://postgres:{POSTGRES_PASSWORD}@localhost:5433/test_expenses_db",
+)
+
+engine = create_engine(TEST_DATABASE_URL, pool_pre_ping=True, future=True)
+TestingSessionLocal = sessionmaker(bind=engine, autocommit=False, autoflush=False)
+
+
+@pytest.fixture(scope="session", autouse=True)
+def _create_schema():
+    Base.metadata.create_all(bind=engine)
+    yield
+    Base.metadata.drop_all(bind=engine)
+
+
+@pytest.fixture()
+def db_session():
+    connection = engine.connect()
+    trans = connection.begin()
+    session = TestingSessionLocal(bind=connection)
+
+    nested = connection.begin_nested()
+
+    @event.listens_for(session, "after_transaction_end")
+    def _restart_savepoint(sess, transaction):
+        if transaction.nested and not transaction._parent.nested:
+            sess.connection().begin_nested()
+
+    try:
+        yield session
+    finally:
+        session.close()
+        nested.rollback()
+        trans.rollback()
+        connection.close()
+
+
+@pytest.fixture()
+def client(db_session):
+    def override_get_db():
+        try:
+            yield db_session
+        finally:
+            pass
+
+    app.dependency_overrides[get_db] = override_get_db
+    # Use localhost as base_url so TrustedHostMiddleware allows requests
+    # with TestClient(app) as c:
+    with TestClient(app, base_url="http://localhost") as c:
+        yield c
+    app.dependency_overrides.clear()
+
+
+common_data = {
+    "category_id": None,
+    "user_id": None,
+    "expense_id": None,
+}
+
+
+def test_health(client):
+    r = client.get("/health")
+    assert r.status_code == 200
+    assert r.json()["status"] == "healthy"
+
+
+def test_user_flow(client):
+    user_data = {
+        "username": "testuser",
+        "email": "testuser@example.com",
+        "role": "regular",
+        "password_hash": "x" * 60 
+    }
+    r = client.post("/users/", json=user_data)
+    assert r.status_code == 201
+    user = r.json()
+    assert user["username"] == "testuser"
+    assert user["email"] == "testuser@example.com"
+    assert user["role"] == "regular"
+    common_data["user_id"] = user["user_id"]
+
+
+def test_category_crud(client):
+    # Create
+    r = client.post("/categories/", json={"category_name": "Food & Dining"})
+    assert r.status_code == 201
+    category = r.json()
+    assert category["category_name"] == "Food &amp; Dining"
+    common_data["category_id"] = category["category_id"]
+
+    # List
+    r = client.get("/categories/")
+    assert r.status_code == 200
+    names = [c["category_name"] for c in r.json()]
+    assert "Food &amp; Dining" in names
+
+    # Update
+    r = client.put(
+        f"/categories/{common_data['category_id']}",
+        json={"category_name": "Updated Food & Dining"},
+    )
+    assert r.status_code == 200
+    assert r.json()["category_name"] == "Updated Food & Dining"
+
+
+def test_expenses_flow(client):
+    # Ensure user and category exist
+    test_user_flow(client)
+    test_category_crud(client)
+
+    # Create expense
+    r = client.post(
+        "/expenses/",
+        json={
+            "item": "Lunch at Chipotle",
+            "vendor": "Chipotle",
+            "price": 25.50,
+            "date_purchased": date.today().isoformat(),
+            "user_id": common_data["user_id"],
+            "payment_method": "credit card",
+            "notes": "Delicious burrito bowl",
+        },
+    )
+    assert r.status_code == 201
+    expense = r.json()
+    assert expense["item"] == "Lunch at Chipotle"
+    assert expense["vendor"] == "Chipotle"
+    assert expense["price"] == 25.50
+    assert expense["date_purchased"] == date.today().isoformat()
+    assert expense["user_id"] == common_data["user_id"]
+    common_data["expense_id"] = expense["expense_id"]
+
+    # Link expense to category
+    r = client.post(
+        f"/expenses/{common_data['expense_id']}/categories/{common_data['category_id']}"
+    )
+    assert r.status_code == 200
+    assert r.json()["category_id"] == common_data["category_id"]
+
+    # List expenses
+    r = client.get("/expenses/")
+    assert r.status_code == 200
+    assert isinstance(r.json(), list)
+    assert len(r.json()) > 0
+
+
+def test_analytics(client):
+    r = client.get("/analytics/total")
+    assert r.status_code == 200
+    total = r.json()
+    assert "total" in total
+    assert isinstance(total["total"], float)
+
+    r = client.get("/analytics/by-category")
+    assert r.status_code == 200
+    data = r.json()
+    assert isinstance(data, list)
+    if data:
+        first = data[0]
+        assert "category" in first
+        assert "total" in first
+        assert isinstance(first["total"], float)
+        assert isinstance(first["category"], str)
diff --git a/compose.test.yaml b/compose.test.yaml
new file mode 100644
index 0000000..2825467
--- /dev/null
+++ b/compose.test.yaml
@@ -0,0 +1,17 @@
+name: "test-expense-tracking"
+services:
+  db:
+    image: postgres:17-alpine
+    restart: always
+    environment:
+      POSTGRES_PASSWORD: ${POSTGRES_PASSWORD}
+      POSTGRES_DB: test_expenses_db      
+    ports:
+      - "5433:5432"
+    healthcheck:
+      test: ["CMD-SHELL", "pg_isready -d test_expenses_db -U postgres"]
+      interval: 1s
+      timeout: 5s
+      retries: 10
+    volumes:
+      - ./scripts/sql/:/docker-entrypoint-initdb.d/
diff --git a/frontend/package.json b/frontend/package.json
index 7c3b201..2c89c9e 100644
--- a/frontend/package.json
+++ b/frontend/package.json
@@ -10,6 +10,7 @@
     "preview": "vite preview",
     "test": "vitest",
     "test:ui": "vitest --ui",
+    "test:ui:coverage": "vitest --ui --coverage",
     "test:coverage": "vitest --coverage",
     "test:watch": "vitest --watch"
   },