What Is Budget Analysis?

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Budget analysis is exactly what it sounds like – sitting down with a budget and reviewing it in detail. The purpose of budget analysis is to understand how an organization's money is being spent and managed, and whether the budget meets the group's goals. The organization could be a business, a government, a charity or any other entity that draws up budgets.

The Role of Budget Analysis

Budget analysis helps companies, governments and nonprofit groups organize their finances. Analysts evaluate budget proposals, see if money is being spent productively, and recommend increases or decreases in funding based on their findings. Analysts don't usually have the last word on the budget. Their role is to provide information to the executives or elected officials who do make the call.

Analyst Activities

If you become a budget analyst, your duties will include more than just adding up figures, such as:

  • Drawing up the budget with program and project managers.
  • Reviewing managers' budget proposals: Are they accurate? Complete? Do they comply with the law?
  • Consolidating all the program budgets into a single document.
  • Explaining your recommendations.
  • Finding alternatives if your analysis shows things aren't working.
  • Tracking spending to see that it stays under budget.
  • Estimating future financial needs.

Analyst Qualifications

Most employers want their analysts to have at least a bachelor's degree. Some prefer a master's. Analysts usually get their degree in fields such as accounting, finance, public administration or statistics. Courses in statistics and accounting are valuable no matter what degree you have.

Budgets for most organizations are complex and detailed. If you're not good at managing details, this may not be the right field for you: A good budget analysis looks at every single item, not skipping over anything. Good communication and writing skills are important, because your work doesn't exist in a vacuum. You'll have to explain your recommendations and conclusions in language your audience – politicians, executives, the public, other stakeholders – can understand, and then answer any questions.

Pay Scale

The U.S. government's most recent figures at time of writing show the median pay for budget analysts ranging from $63,000 to $81,500, depending on the kind of organization they work for. Analysts with professional and scientific services did the best. Budget analysts working with states earned the least, except for those working for schools or hospitals.

Job Prospects

The government projects the number of analyst positions to keep growing, but slower than the rate of growth for all jobs. However there's a lot of turnover as analysts leave their current jobs for better paying, higher ranked positions. The result is plenty of openings for beginner budget analysts.