"Budget" might well be thedirtiest word in the financial language.

People hate budgets because budgets seem confining. Like diets, budgets are forever begun with grand intentions, only to be quickly ditched when spending restraints seem too much like a yoke preventing you from disbursing your money as you like.

But in today's environment, where unemployment is on the rise and where consumers are hung over after a multi-year credit binge, a budget is the very tonic many households need. It doesn't have to be painful if you understand one salient fact: You control your budget; it doesn't control you.

Every month, you dictate how you spend your limited financial resources. Your budget has no control over that. You can choose to eat out every day, or you can choose to replace your wardrobe, or you can choose to pay off additional principal on your debt balances, or you can choose to afford a getaway over a long weekend. Whatever you want to do with your money, you can do it.

But here's the catch:

You can't do everything.

And therein lies the problem. Too many people want theirpaycheck to cover everything they want, the instant they want it, and if the money's not in the budget, they turn to American Express and MasterCard. Bad, bad idea. That credit-reliant mindset got this country into the mess it's now in.

So, as you seek once again to hew to a budget, let's come at this problem from a different point of view. First, we're not going to call your budget a "budget," and, second, we're going to focus on the one component you have real control over, your discretionary spending.

What's in a Name
Money is as much a way of thinking as it is a means of interacting in the consumer economy. As such, we'll attack the budget from a mental angle. From now on, start calling your budget a "spending plan," because that's exactly how it operates. It is your personal plan for spending your dollars in any given month.

Think about your life for a moment. Do you make the exact same purchases every single month? Of course not. What you buy differs from one month to the next. Yet many people use the "average cost per month" approach to budgeting, so that in any given month they can spend an average of $150 on clothes, and an average of $100 on a vacation, and an average of $300 on eating out, and so on.

But life doesn't work that way. You don't take a vacation every month, and the vacations you do take aren't costing you $100 when you take them. More important, you're not saving that $100 each month to cover the vacations when they do arise. You're spending the money on other items and then, when the vacation pops up, you're shoving the full cost—well more than $100—onto a credit card because the budget isn't prepared to handle the outsized outlay.

That's a seriously flawed way to plan your spending.

Instead, budget each month for exactly what you want to buy. You might not need new clothes this month, so how useful is a budget built on the premise that you'll spend $150 on shirts or skirts? Instead, you might rather spend that money on a dinner and a play for you and your partner. That's the expense you should be planning for, and that's the beauty of a spending plan: it doesn't tell you how to spend your money. You get to determine what you think is the best use of your cash each month.

And how do you plan for that?

By planning your discretionary income. That's thekey to successful budgeting.

Managing Discretionary Dollars
Every month you have certain costs that do not change. The mortgage/rent, a car note, insurance payments, electricity and groceries (give or take a few dollars). Those costs are fixed, unless you pay off your car, reduce your electrical consumption, change your insurance policy or move to a cheaper or more pricey apartment (or you refinance your mortgage).

Add up all the fixed costs in your life and subtract that sum from your monthly take-home pay. The result is your discretionary income—all the money you have for the month to pay for the wants you harbor. Exceed that amount and you are living beyond your means. And if your fixed costs exceed your income, you have some serious issues to tackle that go well beyond this article.