The key is to require the kids to make purchasing decisions.
Our kids (ages 12, 11, 9 & 8) are required to purchase all of their own school supplies, clothes, activities, etc. They earn the money from us and can earn a lot, but they have to complete their chores without us asking and turn in their peg slips (like a time sheet).
They then have to decide, do they want the $80 jeans or the $20 jeans? If they buy the $20 jeans then they can make more trips to the skatepark.
Our kids (ages 12, 11, 9 & 8) are required to purchase all of their own school supplies, clothes, activities, etc. They earn the money from us and can earn a lot, but they have to complete their chores without us asking and turn in their peg slips (like a time sheet).
They then have to decide, do they want the $80 jeans or the $20 jeans? If they buy the $20 jeans then they can make more trips to the skatepark.
It works really well. Our system was derived from the book The Entitlement Trap: http://www.amazon.com/The-Entitlement-Trap-Choosing-Ownershi...