Allowance (money)

An allowance is an amount of money given or allotted usually at regular intervals for a specific purpose. In the context of children, parents may provide an allowance (British English: pocket money]) to their child for their miscellaneous personal spending. In the construction industry it may be an amount allocated to a specific item of work as part of an overall contract.

The person providing the allowance is usually trying to control how or when money is spent by the recipient so that it meets the aims of the person providing the money. For example, an allowance by a parent might be motivated to teach the child money management and may be unconditional or be tied to completion of chores or achievement of specific grades.

The person supplying the allowance usually specifies the purpose and may put controls in place to make sure that the money is spent for that purpose only. For example, a company employee may be given an allowance or per diem to provide for meals and travel when working away from home and may then be required to provide receipts as proof. Or they are provided with specific non-money tokens or vouchers that can be used only for a specific purpose such as a meal voucher.

In construction, an allowance is an amount specified and included in the construction contract (or specifications) for a certain item of work (e.g., appliances, lighting, etc.) whose details are not yet determined at the time of contracting. Typically:

The allowance provisions may be handled otherwise in the contract: e.g., the flooring allowance may state that installation costs are part of the allowance. The contractor may be required to produce records of the original takeoff or estimate of the section 2 costs for each allowance item.

Other issues that should be considered in the contract's allowance provision are:

Parents often give their children an allowance (British English: pocket money) for their miscellaneous personal spending, and also to teach them money management at an early age. The parenting expert Sidonie Gruenberg popularized this concept in 1912.

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