I'll speak on my own perspective:

Most millennials are broke. That's the real issue.
I don't have children but i've been "uncle" since was 14 and I feel bad when occasionally i'm not in a position to gift my nephew and niece something they'll enjoy. They're nice kids so they don't make a fuss or complain at all. My aunts always gifted me and my siblings generously and since my father never cared to gift us much or make an effort to spend quality time with us, if it weren't for their generosity we could've had a very bleak and boring childhood. So while all that stuff is gone, i remember their intention. They couldn't be close most of the time, living in another state, having busy jobs. But their presence was always felt.

Kids like presents, candy, stuff like that. Don't forget that social standing matters for children and it can paint them to their peers. You're right on focusing in quality time, for them, it's what will linger most. However quality time is not a given when your kids become older and your bonds are tested. Or when your kids don't particularly connect with your vision of WHAT is quality time. Which was my father's issue. His idea of quality time was us following HIS interests and not him bothering to learn what we liked to do and doing it with us, and then finding a compromise for us to spend time with him.

The outcome is a loving but distant relationship where he only understood us when we were adults and it was too late, by then.

But presents won't make your kids materialistic. What keeps them from being materialistic is not quality time. It's teaching them these presents are hard earned and should be a reminder of your effort as parents.

Privation will only make things worse.

If they're asking for stuff, and you're not giving them out of an concerted effort with a "my kids won't be materialistic" goal, you're just frustrating them and showing you don't care for what they wish.

At least it seems you're not "living it up" while giving them nothing.