I think you did the right thing, but I would have taken it a step further by making him understand how much money you were talking about. I have an eight year old son and I make sure he understands these things. We are very tight with money now a days but even when we were both working and well off, he knew that he doesn't get everything he wants. He appreciates a trip to McDonalds because he knows how much money it is. He is the only kid in his class that didn't get a video game fir Christmas, but this is not due to the money problems, but rather to the fact that I chose to raise my kids without them. My daughter is 23 and never had one. My 17 year old had one and became isolated and would use that thing everywhere. When it "broke" (I decided when it broke) he became a new person. My little one has never had one and will never unless he gets it himself. My older ones now have phones and stuff but they are so careful about it that they don't even let me see them texting.
It is up to us to teach our kids acceptable behavior and you are doing a great job as a Grandma by teaching him rather than just give him things and reward bad behavior. Kudos to you.
By the way, my little one doesn't feel isolated or singled out by not having a video game. He watches TV and he has a computer just to watch movies I choose for him. He has watched classics none of his friends know exist and he can communicate verbally very well with a great vocabulary. I also give him many visual experiences by going places and see things first hand. If he tries to talk to me about something he saw on TV it has to be real, not fantasy.