When you're thinking about money management, think in terms of spending plans rather than budgets. The word "budget," like the word "diet," implies deprivation and self-denial. Spending plans, on the other hand, are comparable to simply eating a variety of healthy foods--and don't forget to allow yourself the occasional treat.

Devising Realistic Spending Plans

The main reason people fail at managing their money is that they don't have an accurate, realistic understanding of their expenses. You have to put in some effort at the beginning to get spending plans set up, but then it becomes much easier. The first and most important thing you need to do is to list all your expenses.

The obvious categories such as groceries, rent or mortgage and clothing are only the beginning. If you have children, list the expense of birthday gifts for parties they attend, any lessons they might take, sports equipment, and school supplies. If you have pets, list the cost of the food, boarding them when you're away, vet bills and grooming. Though it is tedious at the beginning, it's better to break up a category such as "food" into subcategories such as groceries, school lunches, lunches at work, fast food and dining out. That way you can better see where your money is going, and make adjustments as necessary.

It is also extremely important that you include yearly and seasonal expenses, so that you can spread them out over the entire year. Go back through your year's check register and credit card bills to be sure you've planned for insurance payments, holiday parties and gifts, annual membership fees and any other payments that you make less often than once a month. Finally, be sure to plan for regular savings, and set aside a little bit for an occasional luxury.