The other day I helped a friend establish a budget. We did what most people do and set up categories that were meaningful to him and filled in either known or estimated monthly amounts. Few were known. Most were estimated. The end result gave him a much clearer view of his financial picture but I also emphasized to him that budgets are a work-in-progress. Some changes one way or another in his life could considerably affect his bottom line (read amount he can save!).

It is the work-in-progress aspect that I believe gets lost if the well-intentioned budgeter does not track actual expenses. I do not expect my friend to track expenses. The whole concept of budgeting is new to him and it would overwhelm his artistic sensibilities to take on this next step too soon. But for the rest of us who already budget conscious, I cannot emphasize enough how important it is to track real expenses against projected (or target) expenses......

source: http://www.queercents.com/2009/07/28/the-importance-of-tracking-expenses/