After you have tracked your spending, put all your expenditures into categories. Rent or mortgage and bills should be in a particular category, and other categories can include food, transportation, entertainment, savings, incidentals and school. Personalize your budget categories to your lifestyle. If you have college students, you might have a category for tuition or textbooks. Your budget will not look the same as your parents' or your friend's budgets, because you have different spending habits and needs. After composing a budget, take a look at where you can cut down on spending and where you may need to have more money available. This type of assessment should be done every few months. Be realistic with your spending goals. If you normally spend $500 a month on groceries, don't expect to reduce that to $200 to fit your budget. Find other expenses, like entertainment, that could be reduced to allow for a bigger food budget.
There are a number of books, software and websites available to assist in planning a budget. You can download a budget template or buy a workbook or software that allows you to track expenses and income. Moreover numerous online softwares are available which can help you create a relevant budget. To conclude with, one has to keep in mind that nothing of these can be materialized without a sincere intention and action which certainly is worthy of a good household budget.