What Is a Training Budget?

A training budget refers to the overall breakdown, plan, and design of the expenses used for training and development in any business. It is more than just saying you are given $10,000 for training development and that’s it. The training budget is more detailed because aside from the amount of budget, this also shows the allocation of training expenses, step-by-step training plan, monitoring or evaluation, and more. And this budget plan is helpful for all companies not only financially but also to reassure that the entire staff is competent and skilled enough for the tasks at hand.

Statista reported that the global workplace expenses for training grew up to $370.3 billion as of 2019.

Also, Chron said that in America, training costs average around 2–2.5% of an enterprise’s budget.

Top Reasons to Implement a Training Budget

You might be wondering why you need to set a training budget in the first place. But, there are actually numerous reasons to do so. And it just might be what your organization needs at the moment to survive in the industry. So without further ado, here are the top main reasons you should implement a training budget:

Business Preparedness: Setting a training budget plan means that your company is officially prepared not only for the training session but also for the wonderful effects acquired from the training. That means the team members of a business would know how to handle emergencies, problems, or operations gracefully. Training involves a lot of teaching anyway so when everyone can learn effectively, the best results would be acquired. And business preparedness is highly relevant when safety and health are of concern at work.Meeting Goals and Objectives: Sometimes, there are naturally skilled employees at work even without training yet. But the problem could be how their performance does not actually meet the company’s goals and objectives. Hence, it is helpful to come up with a training program where the employees’ performance and work would align with the organization’s vision or mission statement. With the help of identifying the needs for training in business, meeting such goals would come off smoothly.Cost Benefits: You might wonder how a training budget could embark cost benefits when you will be spending for the training budget in the first place. In fact, training costs in the US average around 2–2.5% of a business’s budget. The answer is that cost benefits would be expected in the latter part of the program. As amateurs get trained, they would master the tasks at hand by delivering the job productively, increasing sales, and satisfying customers one at a time. Try comparing your previous sales, profits, or productivity from before having training and after having it for proof.Effective Monitoring: Another important advantage of a training budget is to make it easy to monitor the staff, the working environment, sales, and other factors. You can assess if the amount planned for training was the actual amount spent in the end or not. The same goes for monitoring the actual training session if the whole personnel actually participated in it. Thankfully, regular evaluation reports will help you lessen unnecessary spending.Positive Working Environment: To have training is not just going to tire out employees but to also implement a positive working attitude and environment. As they witness their own improvement from constant training, they would feel more confident about their performance plan rather than feeling amateur all the time. And enabling a positive attitude in the workplace will help the staff be more driven and be ready to face any project next time.Data Transparency: Also, the training budget invites data transparency. The whole budget itself covers all the financial allocation of the budget and other relevant details. Hence, people can see how much money was spent on the instructor, training equipment, training venue, and more from the calculations in the budget sheet, which are typically presented in a table or chart form. And it will develop a sense of trust in the workplace rather than hiding the data from everyone.Flexible for Different Functions: Do not assume that the training budget only applies to the workplace. You can also plan the budget for training other examples like sports, educational training, and more. Thus, the training budget is relevant to other functions as well. As long as you know your purpose and the need for training, setting the training budget comes off easier for sure.Past, Present, and Future Benefits: Most importantly, the training budget helps organizations from the past, present, and future. For the past, the training budget helps you track the history of training employees and the amount spent from the whole training program. For the present, you can use the training budget to be guided of the overall business plan on how to carry out the training. And lastly, the future is benefited when you set a training budget in the next few months to come, particularly in setting a proposed budget for the next training session for your team.

How to Make an Effective Training Budget

After learning the training budget’s meaning and reasons to consider it, are you now ready to create your own training budget? Whether you are a small or big business, investing in training cannot ever be forgotten. Otherwise, you are only putting your own company at risk to perform poorly. And before enabling the training itself, preparing the budget happens first. And you can do that by following these six steps:

Step 1: Consider a Training Needs Analysis

First things first, does your organization need training in the first place? The best way to establish that is by conducting a training needs analysis. This process enables you to analyze what factors and aspects should be included in your training that will meet your company’s goals. Besides that, training needs analysis also helps you prioritize the right training needs, consider the plan that fits the size of your business, and be realistic with your enterprise’s position in the industry.

Step 2: Set a Training Plan

After analyzing your training needs, proceed to create a draft of your training plan. You can discuss this with the rest of the organizers, leaders, or head management of your organization. Expect to talk about what relevant training sessions should be implemented because simply having any training is too broad. You might end up having training that is meant for sports while you are running a business; thus, that is irrelevant. Also, outline the sequence of events on what happens during the first day of training until the last. The same goes for jotting down the training schedule, venue, etc.

Step 3: Allocate the Estimated Costs

Now that you have a plan, start distributing the estimated costs for the items you wrote. You can start allocating costs for the training equipment, payment for the speakers/trainers, productivity loss, and even the employee salary. Also, engage in research because estimating the number of expenses is not just a mere guessing game. You have to be realistic with the possible prices in the market. Although prices may change from time to time, always keep track of what you recorded as they are essential for documentation.

Step 4: Use a Sample Training Budget

Have you tried using any of the sample training budget templates listed above? Those samples are already your best sources on how to create the training budget shortly. Since the template is premade, expect to only worry about the finishing details and inserting your draft’s data. There is no need to begin from scratch. And the best part is that you can change the format, design, and content of the template anytime, making it easier for you to formulate the best training budget that suits your needs.

Step 5: Observe an Easy-to-Follow Structure

Sometimes, the flaw in your training budget is how hard to follow it is. Make it easier to understand, especially if you are going to present that data to somebody else. That means you have arranged the format and design well so following its structure runs smoothly. Or perhaps, you include some additional instructions for a better explanation of the information given. You can even make use of tables, charts, and other visuals if they could help present your training budget much better.

Step 6: Develop the Training Budget

Once you are confident that your training budget is detailed and correct, produce it next. But the challenge does not just stop there. You still have to monitor if the estimated budget does meet the actual budget afterward. And there are many things to learn per application so be sure to report about some problems and factors noticed in the process. At the end of the day, you can add ideas that could improve the training structure or even lessen the costs next time to save. Training offers plenty of learning opportunities anyway.


What are the common examples to factor in a training budget?

You can decide what examples to factor out in your training budget. But commonly, you can factor out the training budget according to the following expenses: initial briefing of the said training, training delivery (eLearning, classes, etc.), training tools and equipment (pictures, videos, or workbooks), training fee, staff time, travel expenses, and contingencies.

How much is the average cost for training a worker?

According to Profit.co, the average cost for training a worker is about $1,200. And that average started way back in 2016. So for now, costs would have boosted as there are more people to train and even technological advancement is to blame. Hence, don’t forget to derive the best estimate for your next training budget.

How are training costs calculated?

The common formula is to multiply the cost of every person to train by the total number of trainees. Next, multiply the savings of each person according to the total number of trainees. And do not forget to compare your results to check how much has changed from before and after training.

What does L&D mean?

L&D refers to the Learning and Development budget. And it likely covers the whole program expenses from the design, delivery, operational expenses. The same goes for the certification, other advanced programs for each employee, and the employees’ salary expenses.

Clearly, a training budget is more than just the financial aspect of an organization. It invites employee engagement, productivity improvement, and lessens the need for supervision. So before you back out from the idea of training, think about how efficient and effective operations would be when the whole staff won’t make lots of mistakes already. And to ensure that everyone is well-trained, be sure to set a well-crafted training budget first. Download sample training budget templates now!