I don't do pocket money yet. My boys are 3.5 and 1.5.

All I do is at the end of the week, I go through my coins and split them equally between the boys. Each gets exactly the same amount and they go into a money box. When it is full, it goes to the bank for when they are older. They don't really care other than the fun they get putting the money in the money box and shaking it.

DS1 knows that if he wants something, he needs to ask. If he demands, then he doesn't get it. If it is a big thing, then mummy & daddy have to save for it. When he knows we are saving, then he just asks us how our saving is going until we have enough.

Personally, I think pocket money will be introduced in our family when DS1 starts school and he has friends. To me, pocket money is for luxuries like going out with friends (even when mum is there), toys with no purpose other than fun etc. It is my job (and joy) to provide the basics and occasional fun things. To me, a bike is fun but also good for health so I would buy it because I love him. My only problem is making sure I get something 'big' for DS2 so I am not spoiling one more than the other.

DS1 knows that daddy and I work to earn money to buy groceries, so we have a house, can pay bills so we have lights, TV and can cook food. The leftover money is saved for what we want.

DS has never really been interested or paid attention to the cost of things other than to ask if we have enough money. If we didn't, he didn't fuss. Personally, I think he understands the concept of money and the value in a general sense but the amounts etc are a bit hard for a 3 year old who isn't really interested in it (YET).

This is a bit of a long-winded ramble but in short, I would buy the bike and tell him that it was because I love him. If I couldn't afford it, I would tell him I was saving and when I would expect to have the money (allowing for money issues occasionally so if I got the money together early, it was a special surprise).

Good luck.