When I speak to groups about Parenting (any aspect), one of the most popular questions that I get asked is whether I recommend giving kids an allowance.  My response is as follows:

The most important thing is to make sure there is a direct and obvious correlation between a specific job or jobs and any money that is given to them.  Make sure it is very obvious that the money is earned and not just given.  In my opinion giving a set amount of money each week or month for doing general things (cleaning their room, clearing the table etc.) is not the way to do it.  Instead, I encourage parents to make clear the tasks that are associated with just being part of the family and therefore do NOT earn money, but are expected.  Then, make clear the tasks that can be done to earn specific amounts of money.  I encourage parents to make a list of jobs and the amount that can be earned if each of the jobs is done, done well and done with a good attitude.  It is best to either pay them as each job is done or indicate the specific amount that will be paid on a spreadsheet and add up the total amount and give it to them on “pay day”, as these methods enforce the direct correlation between the job and the payment.  In our home, we pay the kids on a sliding scale.  They know that the better their attitude and the better the quality their work the more they will be paid.  They have an opportunity to earn a lot or a little; and there is a direct correlation to a job, their attitude and the quality of their work.  Kids need to learn that doing a specific job well and with a good attitude will earn them money and keep them employed.  If kids learn this in the home, then they will be better prepared to hold jobs outside the home when the time comes.