After you set up a budget, you can spend money only on the items that your budget says you can spend money on, and this drives most people crazy! They feel as though someone else is controlling their lives, or that they're living in a straitjacket. But, while budgets can be constricting, the only person controlling your spending is you — or, to be more exact, your financial goals.

Suppose your primary financial goal is to take a two-month trip to Europe. You're sure that you want to do this, and your budget reflects it. Because you'll be taking the time off work without pay, you're saving not only for the trip but also for the income you'll miss while you're gone.

You've figured out that if you give up your biscotti and coffee every morning, turn down your thermostat, and stop buying clothes for a year, you'll be able to do it. But a couple of months into the year, you decide that this “crazy” budget isn't going to tell you how to run your life and that no one should live without biscotti and coffee in a not-very-warm house while wearing old clothes.

What exactly has happened here? Basically, your financial goals have a higher priority than wanting to go to Europe. So, the budget has to be reworked to reflect those financial goals, because if biscotti and clothes aren't in the budget, you can't spend money on them and still make it to Europe. In order to spend euros a year from now, you can't buy items now that you've agreed to give up.