No kids here so maybe not the best source of parenting advice.
But you are teaching your daughter some very important lessons:
1. Money grows on trees, or perhaps sprouts in daddy's wallet.
2. Breaking rules has no consequences.
3. Irresponsible behavior is rewarded.
If you want to change the behavior you will need to be prepared to stop issuing rewards. If she spends all her lunch money the first week then even peanut butter sandwiches are a luxury. I'm not suggesting you starve her but perhaps you should help her plan better. Perhaps she should be buying the peanut butter and bread the first week so she has something later.
Remember, she learns from you. If you set an example of free flowing money she will have no reason to treat it as a scarce resource.
Does she have chores she doe to earn her movie money? Or is that just a handout she gets? At 12 I would think it is time to start earning her fun money rather than just getting as much as she wants from you. I would also give her a relatively sparse allowance so that she has to learn to ration that as well.
Homework -- thanks for the reply. First of all, I am the tightwad of all tightwads. My wife and I, despite the expenses related to kids, manage to save 25% of our gross income. I drive a 21 year old Olds Cutlass and we only recently bought a second car after 15 years with only one. I either walked or bussed to work that entire time. My wife grew up in a poor family and she gets almost all her work clothes at Salvation Army or Goodwill. I garden and can for the winter. I cut coupons to the point where my wife thinks I am a nut (although I do refuse to buy stuff that I would not have otherwise bought just because I have $0.25 off. I don't believe we are setting bad example.
They have chores and we have actually probably given them a lower allowance than most of their friends. When there are special things like going to a movie we usually are willing to pay for that since it is usually quite infrequent.
My wife and I have been talking about giving a set amount for clothes and other things each month and from that she needs to figure out her own budget. The root of the problem is that she is irresponsible, pretty much with everything. She is a 4.0 student and very smart but seems to have the attention span of a gerbil. When she does things like go into the red with her lunch money I take her iPod. She gets it back after a week or somethings, says she'll never do it again but then it does.
Like I said in my post above, my son seems to have picked up everything. He saved until his fingers bled for about a year to buy an iPad. My wife likes to borrow it so she mentioned that maybe she should buy her own. He said that would be a dumb waste of money since she can just borrow his.
My wife and I are just flabbergasted at how she can be so different from the way we have lived for the past 12 years. We scrimp and save. Have never had cable, haul my own trash, make my own soy milk, tofu and mock duck. Have done almost all the repairs on my 21 year-old car for a decade. I could go on and on, but I am a notorious tightwad. Garden, can, freeze and the things my daughter comes along and says she wants practically every day would be a huge expense relative to what we actually spend.