How to Become a Budget Analyst
Budget analysts’ main responsibility in a for-profit business is to analyze the budget and look for ways to use resources more efficiently so as to increase profits. They identify budget issues that need to be addressed, notify management, and then make recommendations for new budgeting strategies.
According to the Bureau of Labor Statistics, about 31 percent of all budget analysts work for federal, state, or local government agencies where they are responsible for determining how to most efficiently distribute money and other resources among departments and programs. Some government budget analysts help evaluate performance programs, analyze financial policies for efficiency and viability, and help draft budget-related legislation.
An entry-level budget analyst often starts with the straightforward tasks of preparing and posting journal entries, reconciling the general ledger account, and closing end-of-month accounts. The job responsibilities of more experienced analysts include more complex tasks:
- Prepare, maintain, and analyze balance sheets, income statements, and other financial records and reports
- Analyze and interpret accounting records
- Monitor disbursements (such as payments to vendors) and research problems to identify issues and recommend corrections
- Help prepare monthly metrics reports, internal management reports, and external regulatory reports
- Help present financial data, progress, and performance metrics information for briefings and other presentations
- Research complex accounting issues and errors to find solutions
The Budgeting Process
In preparing, coordinating, monitoring, and analyzing budgets, the initial budgeting process typically involves four components:
- At the start of each budget cycle, managers and department heads submit proposals to budget analysts for review. These proposals include operational and financial plans for the organization’s programs, estimates of the financial resources needed for the programs, and recommendations for how to fund the programs.
- Analysts examine these proposals to make sure they are complete, accurate, and follow the organization’s procedures, regulations, and objectives. Analysts sometimes use cost-benefit analyses to review financial requests, evaluate program tradeoffs, and look for alternative funding methods.
- Budget analysts then combine individual departmental budgets into operating and capital budget summaries that contain statements that support or advocate against funding requests.
- Analysts submit the budget summaries to senior management, or in the case of government work, to appointed or elected officials responsible for budgeting decisions. Analysts then help the managers or officials analyze the proposed budget to come up with alternative options if the budget doesn’t meet current needs and restrictions.
Tools Used by Budget Analysts
Budget analysts use spreadsheet, database, and financial analysis software. Many organizations now use Enterprise Resource Planning (ERP) programs as part of the budgeting process. By bringing together all of an organization’s operating information into a single computer system, ERP programs help analysts estimate how a change in the budget will affect each part of the organization.
In addition to financial and technical skills, budget analysts need strong verbal and written communication skills. This is because the job involves preparing, presenting, and often defending budget proposals when presenting them to decision makers.
The minimum education for a budget analyst is a bachelor’s degree in accounting, finance, or a related area. For many jobs, the CPA credential is a definite advantage, and sometimes is required. Some senior analyst jobs require an MBA or a master’s degree in accounting, finance, or a related field.
The U.S. Department of Labor, Bureau of Labor Statistics expects budget analysts with master’s degrees to have the best job opportunities. Regardless of the specific major, which could include accounting, business, economics, finance, public administration, statistics, political science, or sociology, classes in statistics and accounting are a must for aspiring budget analysts.
Government budget analysts can earn the designation Certified Government Financial Manager from the Association of Government Accountants. The requirements for this certification includes a minimum of a bachelor’s degree, 24 credit hours of study in financial management, two years of professional experience in governmental financial management, and passing scores on three exams that evaluate competency and test a candidate’s knowledge of ethics and related law.
Income potential for budget analysts can vary depending on factors such as employment industry, location, and level of education. According to the Bureau of Labor Statistics, the median salary for budget analysts as of May 2018 was $76,220, while the top ten percent earned more than $116,300.
When looking at the biggest industry employers of budget analysts, the median salaries that year were:
- Professional, scientific and technical services – $83,890
- Federal government – $82,200
- Local government – $71,420
- Educational services, including private, state and local – $66,350
- State government – $65,420
The BLS expects employment opportunities for budget analysts to increase by seven percent during the ten-year period leading up to 2026, keeping pace with the overall national job growth trend.