Check out the Jesuit Volunteer Corp. A short but deeply meaningful immersion into service, faith in action, selflessness and living on a lot less than you think you need.
Misquoting someone here: “It’s not about getting everything you want, it’s about giving everything you have.” Stuff will never satisfy. Pouring yourself into something heart and soul will.
Start a yearly “review” right before school year. Raise allowance as appropriate. If they want more money, they’ll have to take on more responsibilities.
Take the family on periodic “spending fasts.”
As an exercise, go a day, a weekend or a week without spending any money. Make due with what you have.
Encourage participation. Tie in spending fasts with holidays, lent or in support of a cause.
I once asked my mom if my grandmother (her mother in law) was rich. Her reply: “No, but she likes to think she is.” I think she meant my grandmother spent money like she had plenty of it when she really did not. Can relate. I hope you do better!