An ongoing conversation with parents I know is how to use allowance and chores either together or separately to teach our children about responsibility and the value of money. There is no easy answer here. There's no right one either, in my opinion. Each family has to determine what approach fits with your values and your parenting style.
Money for nothing
Allowance in our house is not tied to doing your chores. They don't get it for doing chores or getting good grades. This is their disposable income on a monthly basis for things I'd be paying for anyway.
My kids get a certain amount of money at the beginning of each month. We have clear items that must come of out this budget. These include money for things like going out with your friends, subscriptions to gaming websites or make up.
If you run out before the month is over, you are out of luck.
As these are expenses I would have to deal with, it costs me nothing to put it in their hands. In fact, I'm fairly sure I'm giving out less money than if I were doing this on an item by item basis and much less of a headache to negotiate.
The purpose in my mind for this allowance is to teach them, in a low stakes way, how to manage their money over time and how to prioritize their spending. They are also learning the value of money on a personal level as they decide what to forgo and what is worth spending their money on.
We've learned a lot about each person's spending style. Who has no impulse control over spending and for what items? Who is going to obsess and worry about a rainy day too much and miss out on fun today? That leads to good conversations about money that are specific to each of them.
They have to identify how much that month will go to savings. We talk each month about general savings for a rainy day and savings for a particular big ticket item they want.
We have a shared Google doc in which they track what they spend.
No borrowing from future months.
They have to supply me with receipts. No money at the beginning of the month if this isn't done.
They have to check with me on certain types of purchases prior to making them especially when buying online.
I do expect the kids help out around the house even though that isn't tied to their allowance each month. I tried a few methods for assigning chores that were hit and miss for us. We finally seemed to have landed on a system that works for us.
Everything that needs to get done around the house has a value in points. The points are based on how long it takes to do it, how hard it is to complete and how undesirable the task.
Emptying the dishwasher doesn't take too long so that's not worth a ton, but washing, drying and folding the towels has to be dealt with over the course of a few hours so that's worth more.
Sweeping up in the kitchen and dining area doesn't take long, but no one likes doing it so it's worth more.
I'd give a ton for cleaning out the cat litter but no one's doing that.
Each week, they need to complete enough tasks to get a certain amount of points.
The purpose for this is contributing to having a shared living space. Everyone has to contribute to what needs to get done around here. It doesn't matter to me who does what. I didn't focus at first on the quality of the work or rewarding more for a better job but they have gotten better at them over time.
The number of points goes up and down depending on what else is going on for them. School has to come first so the week of exams, no points. The weeks between end of school and start of summer activities when they've got lots of free time, more points. For the most part, there's a steady amount during the average school or camp week.
Only once has someone not gotten enough done in a week for no good reason. In that case, that child had a week to make up the difference. We've talked about what the consequence might be if this is an issue -- changing the WiFi password or lowering access to the shared data plan. Mostly the consequence is if you want the grownups to do something for you like a ride to a friends or taking you shopping for something you want, that won't happen if we're doing everything around the house.
So far this divided system is working pretty well for us as a family. It's not for everyone and does require some amount of work from us to manage it. But it fits our values and the lessons we're trying to impart.