My kids are driving me up the wall. Whenever I go shopping, they keep at me—"Mom, can you buy me that? Mom, can you buy me that?" I feel like screaming at them. Don't they understand that I can't afford to buy them everything in the store?
You have voiced what many parents feel, especially during the Christmas season when toys and candy are everywhere, and a shopping trip can turn a little child into a wailing nag or a screaming banshee. The answer to your question is no. Children don't understand that you can't afford to buy them everything. It will take them years to understand money and why an adult who can take $50 out of the bank machine can't do the same thing to buy them a doll or an action figure.
You can't expect them to understand, or to resist the pull of all the fascinating things they see, or to be able to sit still or walk quietly for an hour while you buy things that don't interest them.
Unless you have to, I don't think it's a good idea to shop with young children. They have short attention spans, and they want to touch or play with everything they see. I remember taking my daughter into a pottery shop when she was about two, and the wise owner said, "She thinks with her hands." If any normal child isn't allowed to touch things she sees, she becomes frustrated. If this goes on for more than five or ten minutes, the child won't be able to control her emotions and will start demanding, crying, or having a tantrum.
Children also tire easily, and can't take more than about half an hour of shopping. Get a sitter, shop when your child's in school or preschool, get your spouse to look after the kids, or trade babysitting with a friend so you can shop without having to deal with a whining and crying child.
If you are shopping with your child's money for a gift or helping your child spend her allowance, plan ahead with the child what kind of items to buy. If there are certain things you will not allow her to buy (such as guns or junk food), make this clear before you go shopping. If you are using your money rather than your child's money, make your price limit clear before you shop. Then go directly to an area where the items available are within the price range. Children will only be frustrated if they spend time in the expensive areas of a toy store but can't buy anything. Help your child figure out how much money she has, and what combinations of things she can buy with that money. Then respect her choices, within the limits you set out ahead of time.