Considering how much you have been giving her, I think keeping more for yourself is totally fine. Especially since you have two of the kids with you a lot of the time. That wasn't in your budget, so adjust fire accordingly.
Not sure if your state works on the status quo thing, but that is a factor you should consider. Considering the nearly ridiculous amounts of money you two make (IMHO as a broke student LOL) it seems to me it shouldn't be a problem for her to pay for some of her own stuff too.
Michelle - Proud DR Rockette S: 28JUL07, D'd: 29OCT09 http://tinyurl.com/27j9qo2