I feel like we've got our budget pretty dialed down, in terms of categories at least. Anything that is a recurring expense gets its own budget line, and I just average it out over its recurrence period (for ex., we pay auto insurance every 6 months, so I take the amount and divide by six)-- then I set the budget amount as a monthly expense that rolls over unused funds.
After all the recurring expenses are done, there are the irregular but easily-classified expenses: gas, auto maintenance, food, clothing, etc.
For our more fuzzy categories I have:
Personal Care: anything health/beauty/bathroom supply related (toilet paper, diapers, medicine/first aid).
Home Supplies: anything I would consider a "household expense" (postage, leaky faucet repair, cleaning chemicals, laundry soap, towels, etc.).
Amusement: anything frivolous that we can't really justify as a need for one of the other, more legitimate categories (zoo trip, movie tickets, fancy food/restaurant, babysitter, etc.).