DD2 is almost 12, and has gotten an allowance for a few months. I give her $1 for every year of her age as a weekly allowance, so $11 per week. She only lives with us every other week, so it's only $22 monthly. This is not tied to doing any chores, or to her behaviour, so that she can learn to manage her money and possibly avoid mistakes later on in life.
Of this $11, she puts $3 into her Mad Money Jar, that she can spend freely, although purchases must be okayed with me first, for safety reasons. Then she puts $3 into planned spending, which is for birthday gifts and Xmas. She puts $1 into a giving jar, for whenever she wants to give to a charity of her choice. The last $4 goes to her long-term savings, and into the bank for when she is older.
I still provide her with the necessities like food, clothing and shelter, so she has no need yet to worry about those things. But if there is some video game or something that she wants, she knows she must save for it. She has done this before, saving her own spending money for our holidays and once saved up for a $50 video game that she wanted to have.
Right now, I am only trying to get her into the habit of saving for future purchases and for her future in general. We've had a few blips along the way, but she likes the idea of having her own money and making choices of how to spend it.
How do you decide how much allowance, if any to give your children? Are there any rules on how they muct divvy it up, or can they spend it freely? I'd love to hear from others on how an allowance is dealt with in your homes.