DS1 and DS2 (13 and 12) both get £20 in cash (minus deductions for bad behaviour!) and £20 paid into their bank accounts each month.
Out of that they pay me for the magazine subscriptions which I pay on their behalf.
Then the rest they can do what they like with.
DS1 is a computer addict, so he tends to buy songs from Itunes, online games, etc.. Actually at the moment he's saving to build a computer of his own, and has made a partial start, so there is now more incentive for him to continue saving.
DS2 is heavily into Warhammer so most of his money goes on models, paints, brushes, etc.
I must admit I'm glad they spend their money on constructive things (well, most of DS1's choices are constructive except the online games).
And they both know that once it's gone that's it until next month.
I buy their clothes, school trips, etc.... but they have to take money with them on trips if they want to buy anything while they are there.
I do make them do jobs around the house to get them used to the fact the money doesn't come without effort, but that part of the whole affair is proving somewhat difficult at the moment.