I came up with this idea a few years back when I had just moved to Halifax and was trying to live on a budget and save money for any unforseen emergencies.
The first step of course is to determine your budget and use the envelope budgeting system to keep yourself on budget.
Every time you make a purchase though, instead of recording just the price you paid, also record a second entry titled "savings tax." Set your tax at whatever you feel comfortable with. For me, I added an extra 10% at first, and later changed it to 5%. It's your choice.
The result will be two benefits. Not only will you have some extra savings building up that you can take out of your bank and save elsewhere in multiples of $20, but you will also limit your frivelous spending because you won't want to go through the hastle of making all of those extra budget entries.
As always, check out the A Penny Saved... Challenge page for more savings ideas.