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In a nutshell, budget analysis involves closely reviewing the details of a financial budget. The purpose of budget analysis is to understand and improve the way money is spent and managed. This type of scrutiny ensures that organizations utilize all available finances in the most efficient way to meet overall goals. Concrete benefits of budget analysis include:
Large organizations, including government agencies, nonprofits, higher education institutions, and corporations, often employ budget analysis. However, small companies and individuals can also reap numerous benefits from this financial tool.
Budget analysts help an organization reach financial goals, maintain profitability, and pursue long-term growth. Budget analysts typically hold at least a bachelor’s degree in accounting, business, economics, or a related field.
The job responsibilities of a budget analyst include monitoring spending, preparing budget reports, and analyzing data. These professionals look for trends and perform cost-benefit analyses. Budget analysts also research relevant economic, industrial, and occupational developments to inform future projections and recommendations.
The sections below explore the responsibilities, qualifications, and work environments of budget analysts.
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Whether they work for a public or private university, government agency, corporate business, or nonprofit, budget analysts focus on promoting the efficient use of available funds. Budget analysts study and forecast economic conditions, recommend and plan for future investments, and review funding requests. They also present oral and written reports to staff, managers, and the public.
An entire organization’s financial health may depend on the competency of its budget analyst. Therefore, budget analysts must be highly skilled and generally need a college education and natural aptitude for analytics and communication. Critical thinking skills are crucial for budget analysts, as nearly all of their tasks involve problem-solving and decision-making.
Mathematics skills are one of the most important qualities of a budget analyst, but no analyst can succeed without excellent written and verbal communication skills. Budget analysts must prepare a variety of financial reports and present complex/technical information to different target audiences, such as executives, legislators, staff, and/or the general public, in a way that they can understand.
Budget analysts can work in just about any setting where large financial budgets need to be organized and arranged to meet complex, multifaceted goals. According to the Bureau of Labor Statistics, the federal government employs the largest number of budget analysts. State and local governments also employ a significant number a budget analysts. Other top employers for this occupation include colleges, universities, and companies that provide professional and technical services, such as banks and accounting firms.
* All budget analysts share key responsibilities related to the organization of company finances, and they use a variety of tools to accomplish these tasks. Budget analysts use desktop computers or laptops, calculators, and phones. These professionals also need specialized skills to work with a variety of software, including:
* Accounting software QuickBooks, fund accounting software, tax software
* Analytics software SAS, IBM SPSS, MathWorks MATLAB
* Database and query software Microsoft Access, SQL servers, data entry software
* Enterprise resource planning software Microsoft Dynamics, NetSuite ERP, Oracle Fusion Applications)
* Budget analysts also use internal and external data to perform cost-benefit analyses, identify economic and industry trends, and inform budget recommendations.
* According to O*NET databases, budget analysts may operate under a variety of titles, including analyst, credit products officer, equity research analyst, financial analyst, investment analyst, planning analyst, portfolio manager, real estate analyst, securities analyst, and trust officer. Job titles vary according to a worker’s employer, job description, and specific tasks.
* Budget analysts can specialize in a certain area of finance and economics to meet the needs and demands of their workplace. These areas of specialization are largely informal and are not typically available as degree concentrations. Specializations relate to areas like healthcare, nonprofit, higher education, and government.
* While general duties are similar for most budget analysts, professionals working in certain fields or industries often need knowledge and skills specific to their work environment. A budget analyst at a government agency, for example, may know more about fiscal policy than a budget analyst working for a healthcare facility. Similarly, those who work for manufacturing corporations may have specialized knowledge about logistics and supply chain management.
Although many daily tasks of a budget analyst are solitary activities, these professionals must also collaborate with other company professionals. Budget analysts may meet with program and project managers to develop plans, interact with executives while reviewing final budget decisions, and discuss funding requests with staff members.
Monitoring outgoing cash flow is a key responsibility of budget analysts. These analysts review their organization’s spending to ensure large-scale adherence to budget allowances. Budget analysts also monitor the spending of individual departments to inform future decisions regarding allocation of funds.
Budget analysts monitor external developments in relevant economic, industrial, corporate, and occupational areas. Analysts may gather information and data from financial and trade publications, government agencies, and personal interview sources. Budget analysts utilize this information to forecast trends and other factors that could impact their organization financially.
Although top executives typically make final budget decisions, these professionals rely heavily on the efforts of budget analysts during the planning and finalization processes. Budget analysts may evaluate proposed programs based on cost-benefit analyses, recommend cutting spending in particular areas, or encourage redistribution of extra funds.
Budget analysts interpret extensive amounts of data from internal and external sources, including past and current budgets, economic and financial reports, and investment forecasts. Their analysis and interpretation of data informs decisions about annual budget allocations, investments, and purchase requests.
In addition to strong mathematical abilities, budget analysts must possess keen written and verbal communication skills. Budget analysts frequently explain complex, technical information in a way that is easy to understand. Analysts deliver written budget reports, make charts and graphs, and give presentations.
* Bachelor’s Degree Most employers require budget analysts to possess a bachelor’s degree — preferably in a relevant major, such as accounting, economics, or business.
* Relevant Courses Graduates with a degree in a different discipline can still qualify for budget analyst jobs. However, these candidates should have completed coursework in relevant areas, such as accounting, statistics, mathematics, and economics.
* Critical Thinking Budget analysts must think critically to evaluate budget issues, identify strengths and weaknesses, draw conclusions, and effectively approach problems.
* Reading Comprehension Budget analysts need strong reading comprehension skills to read and write technical and nontechnical documents. Analysts often produce financial reports; presentations; trade publications; and internal communications, such as emails and memos.
* Mathematics Budget analysts use mathematics to solve large and small problems. These professionals must be able to add, subtract, multiply, and divide quickly and accurately.
* Communication Budget analysts use communication skills to make recommendations to top executives and communicate with other staff members concerning budget requests. They must also develop effective and informative materials, such as budget reports, charts, and graphs.
* Near Vision Budget analysts must be able to see details at close range to complete daily tasks using desktop computers, laptops, and paper documents.
* Deductive and Inductive Reasoning To effectively analyze data and information, budget analysts must be able to produce logical results by applying general rules to specific problems; this is also known as deductive reasoning. These workers must also apply inductive reasoning, which involves seeking relationships between seemingly unrelated events.
* Economics and Accounting Budget analysts apply foundational knowledge related to economic principles and accounting practices on a daily basis.
* Administration and Management An understanding of business administration and management principles helps these professionals analyze departmental needs, allocate funds, and coordinate with other employees.
* Law and Government Whether they work in the public or private sector, budget analysts need knowledge related to pertinent laws, legal codes, and government regulations to ensure their organization’s financial decisions are in compliance.
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