"Discretionary items" refers to things that are not necessary or essential, but rather optional or based on personal choice. It includes things like luxury goods, entertainment expenses, vacations, and non-essential purchases. Full definition
To overcome this challenge, retailers must make every effort to drive impulse purchases of discretionary items. (petbusiness.com)
In my view, parents should pay for necessary things such as bus fare and lunches, and the allowance is for more discretionary items. (activeparentingcanada.ca)
Same goes for other discretionary items, such as a clothing allowance, entertainment, and personal care. (mymoneycoach.ca)