When my daughter was in 4th grade she went through an Abercrombie phase. She could easily spend $200-$300 every time we went in, and it seemed like she wanted to go shopping every week.
I realized that I was raising a shop-a-holic. Obviously we are in the financial position where it is possible for us to buy her what she wants, but I did not think that this was a good way to raise her, and I worried that she would develop bad spending habits.
Just before her 10th birthday I sat her down and made her an offer. At the time she was getting $9 a week in pocket money, so I offered to give her $100 a month once she turned 10, but I would no longer buy her clothes. Of course being young and naive she took the offer!
The first month we went to Abercrombie and she spent that $100 so fast. By the third month she had discovered that you could find cute clothes at Forever XXI and Target!
I have raised her allowance by $20 each year so that now that she is 14 she gets $180 per month. I give her extra money at the beginning of the school year so that she can get a bookbag, winter coat and a couple of pairs of shoes, I pay for all of her activity expenses and clothing, but thats it.
She has great taste and a couple of the high school girls recently told her that she is the best dressed girl in 8th grade, which made her day! She has done so well with her money that several of her friends are now on the same allowance and they have all learned the value of a dollar as well as how to dress well on a budget.
Of all the lessons that you teach your children, learning how to live within their means has to be one of the most important.
When my son was about to turn 10 I sat him down and made him the same offer. He was so excited about it, but his sister who was in the room at the time said "Don't do it!!!!!" Of course he did, and for several months spent every penny on video games. He is now 11 and is already making good choices.
I am so proud of both of them.