Most budgets fail not because budgeting is bad, but because your average budget is nothing more than a page of lies. Sounds harsh, not really. When most people sit down and decide that a budget is necessary, they take out a piece of paper and write down how they would like to spend their money. This wish list does not take into account their real financial life. It doesn't account for the pocket change and fun money that is spent on incidentals or even those regular expenses that were simply overlooked.

So here is a key to building a good budget, good data. You've got to know what your monthly financial reality is before you can start projecting the future.

2. Make and Follow a Budget That Actually Works

Do you know precisely what is in your bank account right now? Do you have to juggle payments to make sure that one check clears before you write another? Do you ever find yourself holding your breath and hoping that two checks don't hit at the same time?

The easy way to cure this stress is to make a budget plan for yourself that is not just for appearance. You need to be aware of what is coming in to your accounts as well as what is going out. Do you account for all of your expenses? Include going out to lunch when you are at the office. Oil changes and car care cost money, too. Are you budgeting for all of these as well?

The best thing to do at the start of the budgeting process is to track all of your expenses for thirty days, no matter how big or how small. Write down the amount each time you spend money on lunch during the work week, whether it's lunch altogether or buying a soda to go along with one you brought from home. You even need to account for buying a pack of gum or a candy bar. It may not be much, but it still costs you money. Track the amount of money you spend on gas, and see how much you spend in a typical month with all of the different places you need to drive.

Each time you go out to the grocery store, track what you are spending. Even though something is a necessity, it still costs money. You have to be sure you know precisely what it's costing you. Take the time to look at your grocery bill and make sure that you're taking advantage of all the sale prices offered. Plan your trips carefully, map out each need so that you can stay within your ideal price range. Impulse shopping at the grocery store is just as dangerous as impulse shopping anywhere else. In fact, a lot of people do not even realize that they fall off the budget wagon when they are there. Since it is so much easier to rationalize something as a necessity (even when you don't really need those extra desserts or pizza pies that are on sale), you can find your grocery bills skyrocketing. It is very important to make a list and stick to it when you are at the grocery store, or you will find yourself in money trouble.

A lot of people buy small things at convenience stores on their way to work. They figure that the extra dollar or two for a doughnut and coffee in the morning doesn't really count against them. Guess what? It still costs you money. Even if you stop for a generic cup of coffee and a doughnut at your local deli, it will still cost you about two dollars for that little indulgence. Multiply that by five. That's ten dollars a week for which you didn't account, which would work out to forty dollars in an average month. Do you still think that stop for a quickie breakfast is something you can ignore?

As an important side note, remember that even if you are making a purchase on credit, you are still spending that money. The cash may still be in your bank account at that moment, but for all intents and purposes you have spent it and need to account for it as an expense. That money is still going to come out of your account when the credit card bill arrives.

Your goal is a balanced budget that will help you minimize costs, pay your bills and save money for the future. You will need to use plenty of tools in order to make your plan work. The first tool is your own hard work and dedication. The second tool is knowledge, of your own spending needs and habits. Every tool you use will make your task that much easier, and that much less frustrating.

After you construct your budget, the next step is to make sure that it works. As time goes on, a lot of people find that they overestimated one expense and underestimated another. More often than not, when first attempting to make a working budget, they figure that certain expenses are a lot lower than they actually are. Once they find out that they are spending more than they initially thought, they have to go back and work with the figures to make them right. That's okay. Nobody is going to make the figures perfect on the first try. It might take a couple of tries to make a budget that truly reflects your lifestyle.

If that's the case, then don't be afraid to adjust the budget to reflect the actual costs of your day-to-day living expenses. It cannot be stressed enough that you need to account for everything in your daily routine. The more detail you put into your plan, the more complete the picture is and the fewer surprises you will have along the way. If you are eating steaks for dinner but your ledger says you are paying for a can of beans, then your budget plan will do you no good. When you look at your accounts at the end of the month, you will have a hard time figuring out why you seem to be spending forty dollars more each week on food than you projected. A budget is a living document, meaning that it is a document meant to reflect how you truly live. Make a change if you need to make one. There is nothing worse than starting down the road, just to realize you've got the wrong map.

Conversely, you may need to change a part of your lifestyle that is costing you more than it should. You may find that you need to go out to fewer movies or go out to eat a little less. Maybe you do need to look at your situation and find a cheaper alternative to steak dinners. Maybe you would be better served by making pasta a few nights a week. Maybe you need to rely on groceries more than eating out. Even fast food, cheap as it is, is the type of expense you may need to cut back on to make your budget work. Just like anything else, it costs you money.

It feels great to have a detailed map to your destination laid out, but unless you follow it you are still going to get lost. Work with it and it will work for you.