I'm doing the exact same thing right now. For things other than regular bills (auto insurance is actually my only one now; I'm still at home, so no rent/utilities...yet) and special circumstances (such as a truck project), I give myself $150 per month. It's turned me into an outright frugal spender, and I had enough extra at the end of last year that I was finally able to open a savings account. I've even got a small amount set aside to put in an index fund.

I just hope i can keep this level of discipline as more $$ becomes available...