I never received an allowance while growing up. My parents believed that you got paid after you did some work. I agree with that idea. They probably also did not pay allowances, because it would have been too expensive to cover me and my three brothers.
My wife and I do pay our son an allowance. We retain the right to withhold it if a few menial chores are not done. (He has some chores that are not related to his getting an allowance.) We also require that half of his allowance goes into his bank account. Some people may say that is too controlling, but our son likes having his account and goes around saying, “I am a good saver,” whenever the subject of having enough money to afford things comes up.
To us, giving our son an allowance is the first step to teaching him money management. We have taught our son that after saving a decent portion of his income, it is OK to spend his money on the things he wants. He understands that commercials and ads seen on TV and elsewhere have been engineered by marketers to make their products appeal to him. He also understands that he may have to give up getting one thing to afford something else. He adds up costs of toys in commercials, including tax and shipping, and says, “That costs a lot!”
We let him earn extra money for additional work. This has taught him that hard work can pay off. We also never loan him money based on future allowance, so he knows he has to plan and save before he can buy something.
Sometimes he will ask, “Can I get that?” when we are out shopping. We reply, “Sure, if you can afford it.” He will add up that cost, including tax, and then get it if he has the money. He is greatly empowered by knowing that he saved the money to buy the thing he asked for.
So far, our son is pretty frugal. Perhaps it is partially due to having everything he needs provided at home. But he is perfectly happy with hand-me-down clothes from older friends. And he is pretty good at making things last. With his blessing, we regularly give his old toys away to charity as he outgrows them. Every six months or so he chooses toys to give away.
He is still learning, but he seems to know the value of a dollar. And he knows you have to work to get the things you want.