I too have a four and seven year old.
I don't do allowance as I am all about you do chores and help as being part of the family. I remind them nobody pays me an allowance, hee hee! :) They can earn money too if you have neighbors you know well to ask them to walk their dogs, help around their gardens and so on.
My daughter has saved her tooth fairy money (she has lost nine teeth), cashed in gift cards she has gotten and has quite a stash of money. I have always told her if she really wanted something she has to save and if it is big I will match her on it. Now she asks for money instead of gifts for holidays! :) She recently bought her own scooter and I was so proud of her. There was a lot of pride in her buying it herself too. If she does something beyond the realm of daily chores I will do a "allowance" type thing like give her a couple of bucks, like helping me pull weeds or brushing the dog.
My youngest doesn't get allowance, for him we do the smiley face chart and if he does well with behavior, making good choices, then when we are out somewhere he has a choice of getting a dollar or two for his piggy bank or a fun prize when we are out. Not so much allowance but more just incentive to be on board with the rules. It works 70% of the time, hee hee. He just accepts he earned it or not.
They both have a set of a few small chores each that is expected to be done daily. Like clearing the table after meals, putting dishes up, in the dishwasher, putting away clothes, wiping up their messes in the bathroom, keeping toys picked up, feeding the pets and making their beds.