Proven Steps to Create Effective Budgeting For Employee Training

Pete Ford
Oct 4, 2023
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Proven Steps to Create Effective Budgeting For Employee Training

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Employees need to learn and develop new skills continuously. Organizations around the globe understand the importance of training their employees. However, a successful training program is not just about the content, but also about the budget. Let's explore the world of training budgets and why they are so important.

What is a Training Budget?

A training budget is a specific amount of money an organization sets aside yearly to invest in employee learning and development. This budget covers the costs associated with creating, implementing, and maintaining training programs, such as:

  • Training materials (e.g., textbooks, online resources, software)
  • Training providers (e.g., external trainers, online courses)
  • Venues and equipment (e.g., meeting rooms, projectors, sound systems)
  • Travel and accommodation expenses (if applicable)
  • Employee salaries while they are in training

Why are Training Budgets Important?

Training budgets are important because they help organizations to:

A well-crafted training budget can also help organizations to:

  • Make the most of their employee training and development resources
  • Track the effectiveness of their training programs
  • Identify areas where training is needed
  • Prioritize training initiatives

Tips to Calculate Training Costs

Here are some tips for calculating training costs:

Tips to Calculate Training Costs
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1. Determine the training needs

Conduct a thorough analysis of skills and knowledge gaps to understand what type of training the employees need. What skills and knowledge do your employees need to be successful in their roles? What are your company's goals for the year, and how can employee training help you achieve those goals? Once you understand your training needs well, you can estimate the costs.

2. Consider different budget methods

There are a few different ways to calculate a training budget. One common approach is allocating a certain percentage of your payroll budget to corporate training. Another approach is to set a specific dollar amount per employee. You can also calculate the total cost of training and divide it by the number of participants.

  • Percentage of salary: One of the most common methods is allocating a certain percentage of the yearly salary budget for training and development.
  • Per-employee basis: Some organizations calculate their training budget on a per-employee basis. This means setting aside a particular dollar amount for each employee’s yearly training.
  • Training cost per employee: This involves calculating the total expenditure of training and dividing it by the number of participants. This may include direct costs such as course fees and materials and indirect costs such as employees’ time.

3. Factor in all of the costs

When calculating your training budget, be sure to factor in all of the costs associated with training, including:

  • Training materials and equipment
  • Trainer fees
  • Travel and lodging expenses
  • Employee time (including replacement time)
  • Overhead costs

4. Be realistic about your budget

It's important to be realistic about how much money you can afford to spend on training. If your budget is limited, you may need to prioritize your training needs and focus on the most important training programs.

5. Get buy-in from leadership

Buy-in leadership is a style of leadership that emphasizes getting the support and commitment of others before moving forward with a new initiative or project. Once you have a draft of your training budget, get buy-in from management. This will help to ensure that you have the resources you need to implement your training programs.

Here is a simple formula for calculating your yearly corporate training budget:

‘Total yearly salary budget X 1 to 3% = training budget’

*(1% to 3% is what you can use to represent the industry, its size, or other organization specifics. It changes according to the change in needs.)

Once you have calculated your training budget, track your spending and adjust as needed. It is also important to evaluate the effectiveness of your training courses to ensure that you are getting the most value for your investment.

Here are some additional tips for getting the most out of your training budget:

  • Negotiate with vendors. Feel free to negotiate with vendors to get the best possible price on training materials and services.
  • Take advantage of free and low-cost resources. Many free and low-cost training resources are available online and in your community. Many libraries offer free computer classes and other workshops.
  • Partner with other organizations. Offer joint training programs by partnering with other organizations in your community. This can reduce the cost of training for all involved.
  • Use a learning management system (LMS). An LMS can help you to automate the training process and track employee progress. This can save you time and money in the long run.

According to the report of GlobeNewsWire, Global Corporate Training Market to Exceed Valuation of $493.32 Billion by 2028. Once you have calculated your training budget, you can allocate funds to specific training programs. Be sure to track your spending and evaluate the effectiveness of your training programs so that you can make adjustments as needed.

Steps to Plan and Create Effective Training Budget

Here are some tips to efficiently craft a training budget:

Steps to Plan and Create Effective Training Budget
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1. Align your Training Budget with Company Goals

What are your company's strategic goals for the next year or two? What skills and knowledge do your employees need to achieve these goals? Once you have a good understanding of your company's needs, you can start to develop a training budget that will help you achieve them.

2. Identify Training Needs

Once you know your company's goals, you need to identify the specific training needs of your employees. This can be done through surveys, interviews, or performance reviews. You should also consider the skills and knowledge required for new employees and the skills that your employees need to stay up-to-date with the latest trends and technologies.

3. Estimate Costs

Once you have identified your training needs, estimate the costs associated with each training program. This includes the cost of tuition, materials, instructor fees, travel, and lodging. You should also factor in the opportunity cost of training, which is the loss of productivity or revenue when employees are away from their regular work.

4. Set a Budget Method

There are a few different ways to calculate a training budget. One common method is to allocate a percentage of your payroll to training. Another method is to use a needs-based approach, where you allocate funds to the training programs that are most important to your company.

5. Allocate Funds

Once you have set a budget method, you must allocate funds to the different training programs you have identified. Be sure to consider the needs of each department or team when allocating funds. Consider prioritizing certain training programs over others.

6. Prepare for Unexpected Costs

Setting aside some contingency funds in your training budget for unexpected costs is always a good idea. This could include the cost of a new training program that becomes necessary or the cost of training employees who are promoted to new positions.

7. Calculate The ROI of Training

It is important to track your training budget's return on investment (ROI). This will help you to determine which training programs are most effective and to justify future training expenses. You can calculate training ROI by tracking employee performance, satisfaction, retention, and engagement metrics.

8. Review and Adjust

Your training budget should be reviewed and adjusted regularly. This will ensure that your budget is aligned with your company's changing needs and goals.


Creating a training budget can be a daunting task. With so many factors to consider, figuring out where to start takes time. That's where the tips in this article become significant and handy. By following these tips, you can create a training budget that meets your needs and helps you to develop your employees' skills.

develop your employees' skills

Edstellar can help organizations save money on their training budgets in several ways:

  • Affordable Pricing: Edstellar courses are typically much less expensive than traditional training programs.
  • Flexible Delivery Methods: Edstellar's virtual and onsite instructor-led courses enable employees to learn at their own pace and on their own time. This can save organizations money on travel and lodging costs.
  • Wide Range of Courses: Edstellar offers corporate courses on various topics, so organizations can find the courses that best meet their needs.

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Pete Ford

Pete Ford is a corporate training specialist with over 15 years of experience. His expertise lies in training methodologies, employee engagement, and performance improvement. Pete has a proven track record of developing and implementing effective training programs that enhance employee skills and productivity. His writings provide valuable insights into the world of corporate training, offering readers practical advice on how to design and deliver impactful training programs. His deep understanding of training dynamics makes him a trusted voice in the field.

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