It is easy to overlook annual expenditures and then be hit with a cash crisis when an insurance bill comes due. Also, it is easier to decide on a budget for clothes, recreation and such on an annual basis and then divide the total by twelve to get a rough estimate of acceptable monthly outlays. The trick is not to spend the annual budget in the first two months. Note that savings are budgeted as a monthly expense. If we don't budget it, we won't save.
Savings are for two purposes.
First, to set up an emergency fund in case somebody is laid off or becomes ill. A rule of thumb is that an emergency fund in the form of savings or other readily accessible assets should equal three to five months of after-tax income. Second, once you have set up an adequate emergency fund, the saving is for retirement, to build a college tuition fund and to meet other long-term goals that the family may have. These rules, however, should take into account any sick leave and retirement programs you have through work. Expenditures on credit cards have already been included in the budget allowed for clothes, entertainment and the other expenditures for which you use your credit cards.