We do that here & have since my daughter was about 3 yrs old too. We go through the unused toys & IF Sassy wants new toys she must make room. Special toys are put away for her but what is no longer interesting gets passed on. If she doesn’t want to get rid of toys she gets less. She has learned to share & to give happily. I don’t know how she will turn out but so far she is a very nice child. Thankfully she is into horses so now all she wants is horse stuff & my house is less cluttered. But she also works hard to have her 2 horses, soon to be 3 & has learned to work hard. As soon as she is 13 she will earn her own lessons by cleaning stalls & that was her own idea.
I have a friend who has horses and she says they are wonderful animals that requires allot of work. Good for you daughter and her passion.