Most financial experts tend to be in favor of a regular allowance. Ezzie Goldish, a financial consultant in the New York area, maintains: “If a kid has a fixed amount every week, he can figure out what he can buy, and he knows that if he blows it, he’s stuck. That’s a valuable lesson for later on in life.”There's some other really great advice throughout the piece, especially by others, but one point to stress is that parents should not "bail out" their kids. I emphasize that the amount should be consistent, because it forces and allows the child to plan for future purchases. If they are able to spend their money and then come begging for more to get something else, the whole process is completely self-defeating. One parent allows an interesting "out" for situations like this, or where the child wants something much more expensive, which is to 'pay' them for doing 'extra' chores around the house, which I think is reasonable: It teaches the lesson that through extra hard work you can earn your way to receiving something you otherwise couldn't have gotten.
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* Note: I may be biased.