Prominent research argues that consumers often use personal budgets
to manage self-control problems. This paper analyzes the link between
budgeting and self-control problems in consumption-saving decisions.
It shows that the use of good-specific budgets depends on the combination
of a demand for commitment and the demand for flexibility resulting
from uncertainty about intratemporal trade-offs between goods.
It explains the subtle mechanism which renders budgets useful commitments,
their interaction with minimum-savings rules (another widely-studied
form of commitment), and how budgeting depends on the intensity of
self-control problems. This theory matches several empirical findings
on personal budgeting.