I use a modified version of the "envelope system". I do budget a certain amount for each category, only I don't actually carry envelopes of cash. I have one envelope of cash in my purse, marked "grocery". Other than that, I keep all receipts and log them.
I have a spiral notebook that I use for my budget. I have 15 categories and a dollar amount to be spent, for each. Some include: gifts, donations, grocery, medical, hobby, clothing, school, allowance, auto, etc.
The last day of the month, I tally each category, in my notebook, and then enter this info into my budget spreadsheet on my computer. It really does help to keep spending in check, It also allows me to feel horrible when I go over budget. =)
On my spreadsheet, I have a separate listing for each budget category as well as a place for all of the monthly bills. I include savings account contributions as well. I just made savings a priority and it is part of our monthly bills. Our bank has the option to have money automatically withdrawn from checking and transferred to savings. This helps!
I read so many books, articles and blogs when I was first taking our money seriously. We were forgetting to send off bills on time and spending way too much on who knows what. I gathered a lot of information and this is the system that I came up with. We've been doing this for a few years now. It really works for us.