A budget methodology that really (finally) works (for us)

For years I've attempted and abandoned budgets countless times. There's been the written note pad, Excel spreadsheet, online apps and gadgets, mobile phone apps, google docs, etc.... Nothing ever stuck for more than a few months. Perhaps part of the problem is that we have already demonstrated living within our means quite well by carrying no debt aside from the mortgage kind. I imagine for many people, the motivation to budget everything is a determination to pay off debt. So without that motivation my budget efforts have petered out and eventually stopped.

However, I still recognize the importance of knowing what money comes in and (more importantly) where money goes. So I've taken a more methodical approach looking at our family like it is a business. At least in the sense that we need to consider the monthly budget as s necessity. Another problem with budget tracking is I never knew what good estimations should be for different categories. And some budget tools I used didn't really address or track expenses in this manner. Well I am pleased that I found a system and modified it for our needs and liking.

The base of the system I use is the Envelope System, which I came across via Dave Ramsey. Essentially this is meant to have a number of envelopes that cash is placed in each month for specific categories. Since we use a rewards credit cards for almost all purchases we don't physically use envelopes but I created a spreadsheet that mimics the envelopes with each specific category in its own column.

Another issue was determining what categories and how much money into each would be appropriate. Again I used Dave Ramsey. He has a free budget lite tool on his website that gives you rough breakdown (depending on monthly income) for how much to spend on basic categories like food, savings, housing, clothing, etc... Initially I adjusted his recommendations because he doesn't address total members of household which affects food costs and didn't have a category to address day care cost (out largest expense ... yikes!). Over a few months I further tweaked our amounts and have been content with this system. It provides a good sense of monthly income and outlay. It also lets balance leftover from one month to be carried over, such as the "eating out envelope."

I feel that this new method for our budgeting is easy and convenient enough that we'll stick with it for the long haul. And more importantly, it gives very simple data back to us so we can quickly see where we spend our money on a monthly basis.

What budget method do you use? What tricks, if any, do you use to keep on top of it?