First of all, you mention things like shampoo. I would not consider this an item of question. I am assuming that your wife does not shave here head here.
But, seriously, she needs shampoo. I certainly think asking her to cut her spending is reasonalbe as long as she's not using that $200 to buy things that either she, you, or the kids need. I usually start the month out with aobut $200 in my wallet as well. And, somehow, it is usually gone by the end of the month, but my rules for using cash vs credit card are a little different. I only use cash if the item is under $10. So, if I go buy a book of stamps to pay bills with, that counts towards that $200.