I’m a fan of the “cash” method of budgeting. Starting with giraffe’s idea, I also have 3 basic divisions. Monthly Bills, Must Buys, and Discretionary Spending.
Monthly Bills are just that. I pay them in full every month.
Must Buys are things that I can’t really “cut back” on. Gas for the car, repairs, that sort of thing. I don’t really go crazy trying to control them, but they are budgeted for, and not a huge part of my overall spending. If I need one of these, I buy it.
Discretionary is everything else. Groceries, entertainment, clothes, dining, gifts. This I budget weekly. I happen to buy groceries weekly, so I subtract that from my weekly budget, and take the rest out as cash. I only spend the cash, if I don’t have enough cash I don’t buy it. Want to buy something big, put money in an envelope, or a jar, until you save enough.
I like this because I don’t have to track it. Tracking is annoying, time consuming, and you can spend way too much time trying to figure out where that last $10 went before you find it in your pants pocket.
You do need to have a handle on your spending, understand where your money is going, so this wouldn’t be the first step in your road to financial stability. Once you track your spending, know what you spend money on, and budget a realistic amount for your discretionary, cash can help you stick to it.