i budget loosely, like Zoomy i have a certain amount that i plan to spend on things. I really dont' budget for luxury anymore
For a month i tracked everything i spent and holy crap do i spend a lot eating out! Next was clothes so both has been scaled back and then i draw my budget from looking at how much i spend and what i can cut back on.
I don't always meet or stick to my budget but i try to come as close as possible and i still track everything i spend so i know where my money is going.