Budgeting is discussed ad nauseum on personal and business finance blogs. It seems as though everyone has a method for guaranteed success. Why? Because budgeting is like saving – most of us are aware that it is something that we “should” do. But, far fewer people do it well.

Making a budget is simple; making a good budget requires a bit more effort, as well as a healthy reality check.

To make a realistic budget, track your spending for a couple of weeks – you might be surprised at what just trickles away. Then, make a budget that reflects what you’d like to spend, what you think you “should” spend. Then, make one that reflects what you actually spend.

Making a budget you can live with requires bringing those two spending plans in line: you can’t spend what you don’t have; and you can’t pretend you don’t spend money that’s being spent!

Part of achieving this fit involves determining how much of the money you spend is on “wants” versus “needs.” A common example is that we need clothing, but we want designer jeans. The “wants” are the places that may have to be reduced to ensure that your “needs” are met.

I’ve heard more than one person say, “I don’t need to budget, I only spend what I have.” Assuming that’s the case, then they are MUCH more organized about their money than I could be if I did it in my head. They must already know what they have, what they spend, and/or have found a way to compartmentalize it. For the rest of us, a budget that has the following characteristics is the first step toward successful money management:

- your budget should be written down (on paper, on the computer… it doesn’t matter where)

- your budget should make sense to YOU. It doesn’t have to be like everyone else’s. You’re the one who will be using it. Make sure it works for you, or you won’t monitor it and work with it

- your budget needs to be complete – it needs to include all incoming and outgoing money

- your budget needs to be realistic – in addition to being complete, it needs to reflect the way you actually live. If there are specific goals you have with regard to spending in certain categories, keep a “ideal” and an “actual” budget, and compare them at the end of the month.

- your budget needs to be flexible: things happen, give yourself room — and permission — to shift things around. But, make sure you’re keeping track of these shifts… if you end up shifting money from your “savings” to your “entertainment” each month, you need to make a decision about whether to change your actual budget to accurately reflect your lifestyle; or whether to make a lifestyle change to come into line with your ideal budget.

Set yourself up for success in budgeting by being realistic about what you have, and what you need. You’ll still hear plenty of opinions from others about the “foolproof” method they use, but once you’ve gotten cozy with your own spending and needs, you’ll come to realize that budgeting is deeply personal — only a budget that is generated from within your experiences and priorities is ever going to work for you. So, smile politely, and get on with creating the budget that works for you.