Creating a realistic budget is a relatively straight forward project for us. We’ve been married for about 5 years so we’ve developed a little bit of a system.

Track your actual expenses.For a budget to work, we need it to be based on our actual family’s needs, so we use tools like Mint or Quicken to see where our money went.
Review your actual expenses. We sat down last night and talked about what the numbers were for different categories.
Create a doable budget. We then pull out the spreadsheet and create a basic budget.
Update your bill pay. For those regular and recurring expenses we go ahead and get the automated bill pay done. Savings and extra payments are also automated if applicable.
Review and adjust.Getting a budget done just right on the first time isn’t always the case. Most of the time we have to tweak it just a bit to get working.
We’re getting better with budgeting, but it still takes time. Doing the budget together is something that helps us to get on the same financial page for the upcoming year.