Allocation Definition

An allocation is simply an arranged distribution of funds among several possible choices. For example, a 401(k) [definition of 401k] account will have an allocation established to determine how withheld payroll funds are disbursed among various possible mutual funds.

As it pertains to debt consolidation programs and related services, a debt management plan (DMP) will have an allocation set up to determine how deposited funds are disbursed among various creditors and lenders that you owe.