The way we did it:
The kids were given $1/year of age every Sat after they became 3.
They were told this was not for doing 'chores' but it was because Daddy worked for money for his family, and he was able to share.
Half went into their college fund (we took a trip to the bank regularly), 1/4 went into their 'short term savings' (money they could spend after discussing it with us, but was always their decision), and 1/4 they could spend however they wanted, right away.
We paid for 3 outside of school activities per year and paid for all school activities.
There were things they were just expected to do and we didn't seem to have a problem with that. One thing, was to clean the toys from the living room every night. If Mom had to do it, they were charged $.25 per time. It didn't take long for the kids to see it was smarter to pick up their toys.
We had one rule for the bedroom - keep the floor relatively picked up, and the beds made. If they weren't, I didn't want to see it. So, if the door was open and I saw it, .50 for making their bed and .25 for everything picked up.
If they didn't want me to see their room, the door must be kept closed. The boys kept their room clean, our daughter chose to just keep her door closed all the time. We only had one problem - When she was about 12, our first basenji kept tying to get upstairs and scratch at her door. We had never had a basenji before, so I just thought it was a breed thing. We found out later she had brought a rat home from school and kept it in a cage, in the corner as far away from the door as possible.
TheHusbandHalf always brought towels and clothes down to the laundry room, so the kids naturally thought that was just the way things were done. So they did too.
From what I can see, the 2 boys are excellent at handling their money. Our daughter seems to spend more that her parents would have in her situation, but nothing severe (she just got married yesterday!) They are 33, 31, and 30, never drinking excessively or drug problems, and all there were able to buy their first home. THH and I can see that none of them believed in the 'work on it while you live in it' idea, that their parents lived with!