Preparing a budget can be a long and arduous process, but it doesn't have to be. By efficiently gathering all of the information you need and following clear steps to gain approval from top management without excessive delay, you can implement a new budget in no time.

A well-prepared budget is an effective management tool as it enables you to see if you are on track to meet goals or if corrections are needed mid-course.

Run this checklist on an annual basis, ideally 3 months before the end of the fiscal year, to prepare your departmental budget as efficiently as possible.

First steps:

Record basic details

Contact for approval

Set target date for approval

Before you begin preparing the budget, set a target date for approval.

Current financial status:

Review the most recent budget

Before you begin planning the new budget, it's essential that you have a good understanding of the department's current financial status. 

Review the most recent budget to gain an understanding of where the department's finances currently stand and identify significant variances that need to be addressed. 

Evaluate any significant variances

As you review the most recent budget, analyze and evaluate any significant variances to understand if there are any adjustments that need to be made when planning the current budget. 

Note down any significant variances below along with a brief evaluation of their cause and potential impact on future budgets. 


Define and prioritize three to five goals

List three to five goals for the upcoming year using the form fields below.

The goals should be:

  • 1
  • 2
  • 3

Examples of clear goals: 

Increase gross sales by 5%

Reduce office supply expenses by 10%

Decrease admin costs as a percentage of revenue by 3 points

Reduce inventories by 2% bt the end of the fiscal year

Ensure that the goals are aligned with the organization's strategic priorities. 

Prioritize the goals so you can assign responsibilities and monitor performance accordingly. 

Determine ways of achieving the goals

Once you have defined a handful of goals that are aligned with the company's strategic priorities, record the ways in which you and your colleagues will go about achieving them.

What needs to be done, and by whom, to give you the best chance of success when you review the budget this time next year?

Projected expenses:

List all department expenses

List all of the expenses incurred by your department. These are broken down into fixed costs and variable costs. 

For example, for a simple office budget, the list of expenses may look as follows: 

Fixed costs:

  • Payroll expenses
  • Utilities (electricity, phone, internet, water, gas etc.)
  • Rent

Variable costs:

  • Office supplies (pens, pencils, legal pads, copy paper, stapler/staples, tape, printer ink, mailing supplies, filing supplies)
  • Postage/freight
  • Equipment maintenance and repair

Estimate the average monthly cost

Estimate the average monthly cost of all your variable expenses. 

Variable expenses: {{form.List_of_expenses_-_Variable_costs}}

Then add together your variable and fixed costs 

Fixed expenses: {{form.List_of_expenses_-_Fixed_costs}}

Calculate the total annual budget

Now that you've estimated the monthly cost of all expenses, multiply that by 12 to get the estimated annual budget.

Average monthly cost: {{form.Average_monthly_cost}}

Projected income/funding:

List all sources of income

Once you've done the expenses side of the budget, list all of your department's sources of income and/or funding that represents the money you have to spend during the upcoming year. 

Project total annual income

Now project the total amount of income/funding your department will have for the upcoming year. 

Sources of income: {{form.Sources_of_income/funding:}}

Putting it all together:

Document financial data in a budget spreadsheet

Now it's time to document all of the financial data you have gathered in a budget spreadsheet. 

If the spreadsheet is accessible online, enter the link below so you can refer to it with ease. 

Important data


List of expenses: 

Average monthly cost: {{form.Average_monthly_cost}}

Total annual budget: {{form.Total_annual_budget}}


Sources of income: {{form.Sources_of_income/funding:}}

Total annual income: {{form.Projected_total_annual_income/funding}}

Finalize the budget

Finalize the budget by verifying that it: 

  • 1
    Includes all income and expenses
  • 2
    Meets departmental and organizational goals
  • 3
    Is aligned with historical data (if any)
  • 4
    Has been documented in a neat and orderly spreadsheet

Final steps:

Request approval from top management

Submit the budget to senior management for approval. This is a critical step in the budgeting process that must be completed before it can be incorporated into the master budget and implemented across the organization. 

You can use the email template below to request approval. 

Obtain approval from top management

Ensure you have obtained approval from senior members of staff before moving on to the last couple of tasks in this checklist. 

Note down any important points of feedback in the form field below 

Incorporate into the master budget

Once you've got approval from top management, you can incorporate the departmental budget you've created with the company's master budget. 

Keep track of all changes you make to the master budget. Remember, you are dealing with sensitive data here, so take your time in order that you maintain data integrity. 

Assign management responsibilities

In order to reach the goals that you've set out to achieve, you need to assign specific responsibilities to other managers. 

This is the final step in the budget preparation process and the first step of implementing the budget you've put together. 


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