misty, i have used with my kids the same approach (gifts for special occasions only), but am now at the stage of 'they need to earn and save to be able to purchase'. What do your kids earn things for and how much do they get?
The clean or do other chores around the house (they don't get paid for every chore though, this is extra chores onto of regular household chores). The kids know that they oly get 'extra' paid work if they do the other jobs (set table, clear table, tidy toys away) that they are exected to do as regular chores first. How much they get paid is dependant on how labor intensive the chore is. It may be 20cents or it may be $2 (for the 2yr old its almost always a 50c peice because they are the biggest lol; the 6.5yr old understands the worth of coins, so she wants the gold ones ). But it is always a small amount, because then they actually have to save to buy what they want; so it teaches the value of working, the value of saving and the value of money. Sometimes, they will ask Nanna or Granda or one of their aunties or uncles if they have any work for them to do (they love that more, because they know they get paid more )

ETA: On occaision, when Angel has found something she desperately wants on sale, I have bought it and put t up in the cupboard and she has had to earn all the money and then ay me for it before she could actually have it. (We call it home layby, and it took her 5mths to pay the last one off (ZuiZui pets and track); but it is now he most prized possession)