If there's a chance that I can merge both scenarios then I will do it, but if I will choose one, it would be the 2nd one.

The 2nd one is harsher than the 1st one, but if you want your child to learn something about money, this is a better approach. Of course as a parent, don't put it at a point where you will really not give them money at all. Remember that it's still a child, and a child still can't work for their own money. Let's minimize it at least, and teach them how to save their money as well. Sometimes, their environment also affects them because maybe they might be curious on something where they can earn from it, and since the money you're giving isn't enough for them, they will find a way.

I want my child to learn from their own experience, but as a parent, we still need to guide them, teach them, and take care of them until they're capable of doing it themselves. I think my opinion is leaning more towards the 1st and 2nd scenario being merged.