While I am a big fan of Dave Ramsey's philosophy and we utilized his snowball system of paying down our unsecured debt, I've never used his budgeting plan.
Rather we use a allowance system which works like this. I pay all the fixed and semi-fixed bills, the mortgage, car insurance, utilities, etc. Then I allocate and move money to savings which can include savings for upcoming annual bills, i.e. property taxes, or upcoming expenses, i.e. vacations.
Then each of us receives the same amount for day to day discretionary spending which includes groceries, gas, dry cleaning, personal expenses, gifts (but not holiday spending), eating out, entertainment. And part of the reason for this is our expenditures in these categories changes from month to month as Ms. Oster pointed out.
Example: You go to the store and milk is more expensive than usual (something about the sequester?) Because you have your limited grocery envelope, you have to respond to this by buying less of some grocery. You could buy less milk, or fewer veggies, or less pasta. However: It may very well be that you’d rather keep with your normal grocery purchase and cut back somewhere else—say, two fewer lattes this week. But because the “coffee” budget is separate from the grocery budget, you end up with the same number of lattes and fewer bananas.
Additionally, neither of us likes to feel overly restricted so with one pot to spend on day to day spending we can spend as we like on different categories but we restrict the overall amount of money.
How do you budget your day to day expenses?