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.

For other uses, see Allowance (disambiguation).
Pay Day for Boy Scouts at a fruit-picking camp near Cambridge in 1943. "Saturday is Pay Day at the fruit-picking camp. Boy Scouts queue up in a pay parade to collect their pocket money from the Scoutmaster. Over 14s get half a crown, whilst under 14s receive a shilling."

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.[1]

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.

Types of allowance

Construction contracting

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:

  1. the allowance amount covers the cost of the contractor's material/equipment delivered to the project plus all taxes less any trade discounts to which the contractor may be entitled with respect to the item of work;
  2. the contractor's costs for labor (installation), overhead, profit, and other expenses with respect to the allowance item are included in the base contract amount but not in the allowance amount;
  3. if the section 1 costs for the item of work are higher (or lower) than the allowance amount, the base contract amount should be increased (decreased) by the difference in the two amounts and by the change (if any) to the contractor's costs under section 2.

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:

  • may the client insist that the contractor use whomever the client wishes to do the allowance work?
  • may the contractor charge the client back for any costs arising from a delay by the client (or client's agent) in selecting the material or equipment of the allowance in question?

Allowances for children

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.[1][2] The parenting expert Sidonie Gruenberg popularized this concept in 1912.

Usually young children get "gift" allowances. For some parents, when children are old enough to start doing chores, an allowance becomes "exchange" money. Later, as the child grows older, some parents give children projects they can choose or ignore, and this type of allowance can be called "entrepreneurial."

A 2019 study by the American Institute of Certified Public Accountants found the average allowance paid to U.S. children was $30 per week.[3]

Allowances for adults

In gynocentric countries like South Korea and Japan, it is customary for the woman to control the entirety of household finances. Any paycheck the husband receive goes straight to the wife's bank account, and wife usually pays around 5~10% of it as allowance to the husband. This practice is very common due to a widespread social prejudice that men are unfit for managing household finances.

In 2015 South Korea, court granted at fault divorce (no fault divorce is not allowed in South Korea) to a husband who received only 100000 KRW ($95 USD) per month in allowance from his wife.[4] The article states that the husband was a professional soldier but his entire salary went to his wife, so he was forced to take 2nd job as a construction worker to afford to buy his meals. This ruling established that excessively low allowance from wife can be counted as a fault towards divorce in South Korea.

Japan three quarters of men get a monthly allowance from their wives. Since 1979 Shinsei Bank has been researching the amount of spending money given to husbands by their wives. In 2011 it is 39,600 Yen or about $US 500.[A 1] This compares to before the bubble burst when the allowance was 76,000 Yen in 1990 ($530 1990 dollars[A 2] or US$ 1,040 in 2021).[6]

See also

Annotations
  1. The annual exchange rate for 2011 was 79.81 Yen for one American dollar.[5]
  2. The annual exchange rate for 1990 was 144.79 Yen for one American dollar.[5]

References
  1. Weston, Liz (May 20, 2011). "Allowances: 'Welfare' for kids?". CNN. Archived from the original on May 1, 2012. Retrieved October 4, 2012.
  2. Haas-Dosher, Michelle M. (August 8, 2000). "What Experts Say About Allowances for Children". hffo.cuna.org. Archived from the original on April 21, 2014. Retrieved October 4, 2012.
  3. New Study Finds Parents Pay Kids An Allowance Of $30 A Week On Average
  4. "Court grants divorce to a husband who only received 100000 won in allowance". KBS News. 2015. Retrieved August 29, 2020.
  5. International Trade Administration (2012). "U.S.-Japan Annual Average Exchange Rate". International Trade Administration, U.S. Department of Commerce. Archived from the original on October 28, 2012. Retrieved October 4, 2012.
  6. Oi, Mariko (September 27, 2012). "Why male Japanese wage-earners have only 'pocket money'". BBC News. Retrieved October 4, 2012.
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