There are two keys to an effective budget - having it and following it. If you haven't got one, you're probably overspending simply because you don't know how much you're spending. If you don't follow it, well, what's the point of having it?
A budget is not a trivial undertaking. Don't expect to be able to bang one out in an hour and not have to worry about it anymore. If you want a budget that's actually accurate, you need to revisit it often in order to track your progress, make updates, add new expenses, etc. On the bright side, a budget does not have to be a complex document. I use a very simple spreadsheet.
My budget (we'll use mine as an example) has two sections. One is a list of all of my expenses including bills, savings, miscellaneous expenses, etc. The second section breaks it out by paycheck (I get paid twice a month so my second section has two parts) and shows which bills get paid per paycheck. It shows the amount budgeted for each bill and the amount I actually spend. That way, if I'm going over budget, I know it immediately and can adjust for it. Here is what a section might look like:
| Bill | budgeted amount | actual amount |
| Mortgage | $1200 | 1149.65 |
| Power | $300 | 213.65 |
| Water | $100 | 79.21 |
| Food | $350 | 362.12 |
Just looking at the example numbers above, you can see that I may be able to budget less on power but I either need to budget more on food or cut back on my food expenses.
Of course my budget document is more complex than that (I have a beginning and ending balance as well as a running balance so I see where I stand after each expense and what's left over). You're budget may be simple or complex; it doesn't matter. What matters is that it accurately reflects your expenses and that you know how to maintain it.
The trick to a good budget is to remember that it's a living document. You need to revisit it periodically and decide if things need to be adjusted and if so, what.
Another important thing to remember is to include your spouse whenever you're changing something. Financial decisions (in my opinion) should be made together. A husband and wife should be moving forward together. This is especially important as it relates to finances because financial issues can cause a lot of stress. Work with your spouse on a strategy to keep your budget balanced. It will likely be a compromise but if you both agree on your financial strategy, it will be a lot easier to move forward with it.
Once you have your budget worked out and start following it, you will be surprised at the results. You may have a lot more money than you thought you did. Even if you don't, you will know where all of it is going and won't have the stress that comes when you don't know if all of your bills were paid, how much money you actually have, what other family members are spending money on, etc. Some may see a budget as a set of limitations but I see it as a path to freedom.
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