Our 8 year old knows how much money she has, and thinks $20 is a lot of money. We have to work better on splitting their allowance money into categories. Most of the time their allowance is dolled out in $1.00 bills, so the actual splitting into different savings piles is difficult. I'm going to try to make it my goal this month to have the money split before I give it to them, so that we can work with them on saving long term, spending, and giving.
We've not directly tied allowance money to chores because our 8 year old would just give up the money and refuse to do the chores. I want them to do their daily chores because they are part of the family not because we pay them for them. An allowance is to teach them responsibility with money and let them buy things and learn how much they really cost.
I've been using the $.50 per year allocation, so an 8 year old would get $4.00 a week. It adds up quickly when they aren't buying anything! It is hard for me to make them part with some of the money to put in their savings accounts. I know they wouldn't really miss it, but that part of the training is hard for me to deal with. Hmm, maybe I need to look into my own feelings about saving on this one...