Does Personal Budgeting really work?

I have written below some thoughts on personal budgeting and wanted to share with you and also obtain feedback with tips and tricks from your experience.

Most of us seldom pay attention to disciplined personal budgeting, if used properly it can be a powerful tool to control our finances.

A budget can be created in a simple excel worksheet or ready made products such as Quicken can be purchased.

The classification of incoming income or cash in can be straight forward for most of us, as we typically employee single source of income, such as from our job or main business 

While we have one or two way of cash in but even the simplest one of us have number of methods for expenses or cash out.

In order to properly control out going expenses it is important to properly classify expenses to the right categories, I am reconsidering the budget categories that I may use in future as listed below

High level budget will have six catagories with various sub categories under each as illustrated below 

      1: Mandontary or Important expenses
      2: Value added or Q2 expenses
      3: Charity or Gifts
      4: Parents or Elders 
      5: discretionary or luxuary expenses

Each of the above may have many sub catagories as required based on nature of expenses as shown below

    1: Mandontary or Important expenses
          Basic food, rent, clothing, water and elec bill, child school, health etc I.e. the must have expenses
     2: Value added or Q2 expenses
           This is what you mainly spent on improvements or towards future financial security of your and your family e.g. Higher education, self improvement via technical skill 

      3: Charity or Gifts
             Zakat, charitable contributions and any gifts that may be given to relatives or other in need
      4: Parents or Elders 
             Most of our culture require supporting elders in one way or another, this is close to Mandontary expenses

      5: discretionary or luxuary expenses

          This category have biggest opportunity of saving, anything no fitting in above can mostly fit in here, excess dinning out, shopping, electronics, vacations beside basic visit to home country, movies, entertainment, excess house hold furniture expenses and so on, basically anything with out which life can go Normal can fit in here.