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Learning & Development Budgets: The ultimate guide for beginners

Learning and Development is a vital aspect of any business (or it should be!). If your employees aren't learning, they're not growing. As a Learning and Development expert-in-charge, it's your responsibility to ensure that the company's growth doesn't stop at the workplace door – which means ensuring the company pays for their training and development too.

However, creating an effective learning & development budget isn't as straightforward as simply allocating funds from the company coffers each year. That's because there are so many ways to use these funds effectively – some more effective than others! In this blog post, we'll discuss what makes up a good L&D budget in detail so that you can start creating one yourself right away.

Table of Contents:

What is a Learning & Development budget?

A Learning & Development budget is a plan for the future. It's a way of making sure you are spending money on things that are important to you. It's also a way of ensuring that your business has enough money budgeted for training and development to continue improving.

Benefits and downsides of having a Learning & Development budget

Having an L&D budget certainly has its benefits. A sound budget:

  • Helps manage the L&D functions by allowing you to make decisions based on numbers rather than gut-feel

  • Helps link learning to business priorities

  • Helps monitor learning activities and take corrective actions where needed

  • Improves the allocation of resources for learning

  • Communicates priorities to all interested stakeholders

  • Identifies and eliminates redundancies in learning solutions

  • Improves communication with management about what's happening in L&D and how it supports achieving business goals.

But it doesn't come without any drawbacks. A fixed budget:

  • Has a complex and confusing process

  • Takes time to create and ensure its validity

  • Can be inflexible and not adapt to changing business requirements and environments

  • Can lead to more spending even when it isn't needed (i.e., exhausting the budget before the end of the year so that the same amount is allotted next year)

L&D Budget Considerations

There are several considerations to think through when creating a Learning & Development Budget. Before you even start contemplating how much money you'll be spending, you need to consider:

  • The current situation in the business (priorities, objectives, strategic direction) and the desired outcomes (what the business wants to be different in 1, 3 or 5 years)

  • The trends in the market and expected changes (check out the L&D Budget Stakeholder Interview Guide in our Ultimate Toolkit for L&D)

  • What needs to be included?

  • Who will the budget affect, or who's in scope?

  • Who are the stakeholders?

  • What is the process for the budget sign off?

  • The configuration of the budget structure – profit center or cost center (watch this YouTube short to learn the difference).

Please note that this list is not exclusive and, depending on your organization or stakeholders, there might be additional things for you to consider.

Methods for building an L&D budget

Approaches to budgets

There are two common approaches to building an L&D budget: cost-per-employee or program-based.

Budget per employee

This approach allots a certain amount per employee that can be spent on learning, training, and development during that financial year. The decision maker, in this case, would be the employee or their manager. L&D would communicate the monetary allowance for the year and then assist in registering or organizing the event for the employee.

Program-based budgeting

Program-based budgets are driven by company-wide learning needs that are met using custom learning and development programs. Examples of these include mandatory or compliance trainings, leadership and management development, teambuilding, a library of online courses, etc.

In reality, most budgets utilize a mixture of these two methods. Each business unit would be given a certain budget per employee, and in addition, they would have access to (most, if not all) company-wide initiatives.

Alignment to business

If the business has a clearly defined strategy and priorities, the L&D budget needs to reflect those. The key question the Chief Learning Officer or Head of L&D needs to be able to answer is, "Which learning projects will help the business accomplish its strategic goals?"

In effect, this means that:

  • All L&D plans must meet the organization's operational and strategic goals,

  • All programs should increase performance (be that in terms of productivity, quality, or time)

  • Ideally, all learning initiatives should add value either as increased revenue or a reduction of costs.

  • Each program or initiative has an associated cost, which is reflected in the budget details.

Types of Learning Costs

Regardless of the approach to budgets you are going with, each learning program or initiative has several costs associated with it. Some of these include:

  • Assessment costs – costs of researching the learning needs throughout the organization (time of staff, consultants fees, software, and other vendors, etc.)

  • Development costs – costs of designing a learning activity, program, training, or any other initiative (time of staff, consultants fees, external vendors, learning materials, etc.)

  • Delivery costs – costs of delivering and/or facilitating any learning and development events (time of staff/trainer/facilitators, materials and fees, travel, facilities, meals, time of participants, etc.)

  • Evaluation costs – the costs associated with measuring the impact of the learning interventions (time of staff to develop an evaluation strategy, design data collection and analysis tools, preparing and presenting reports, etc.)

  • Administrative costs – costs associated with running the L&D function

  • Travel, lodging, and meals costs – costs for traveling, accommodation, and meals for facilitators and participants.

  • Facilities costs – costs for learning facilities (training rooms, hotel conference centers, etc.)

  • L&D staff salaries and benefits

  • Learning and promotional materials – costs associated with creating, printing, and distributing any learning-related materials (handouts, workbooks, brochures, pins, posters, flipchart stands and paper, whiteboards, markers, pens, badges, etc.)

  • Online Learning costs – costs for access to any online learning libraries (online video courses, online books, online universities, etc.)

  • LMS costs – costs for setup and maintenance of any learning management systems.

  • Overhead costs – additional costs not directly related to a particular initiative

Please note that some of these types of costs can be grouped together. For example, if you're planning a Leadership Offsite event, you could include the travel and facilities costs under the delivery or keep them separate.

L&D Budget stakeholders

The learning and development budget is part of the global budget. This means that people from all over the organization will want to be involved in creating and approving it. We recommend that you consider and involve the following stakeholders:

  • Business leaders — If learning and development programs don't align with business goals, they won't be effective. Business leaders can help ensure this happens by providing insight into how learning contributes to their company's bottom line (and vice versa).

  • HR Business Partners — HRBPs are good at identifying opportunities for skill building across various departments since they're already working on employee retention and engagement issues with their teams on a regular basis.

  • Finance Department — If training is going to cost money—and it most likely will—you'll need funding approval from finance before you start spending big bucks on new courses or programs. Another very useful insight the Finance department can provide is the budget preparation guidelines – they know the best way to prepare it and how to ensure it gets approved.

  • CHRO – the Chief Human Resource Officer usually approves the overall budget and gets the final sign off

  • L&D Staff – there might be variations between what the Chief Learning Officer (CLO), the Head of L&D, and the L&D team do, but their tasks include:

    • Reviewing the strategic plan based on cost allocation,

    • Engaging with business leaders and HRBPs to understand the business's learning priorities and needs,

    • Collecting information to inform the budget from previous years' budgets and highlights from business leaders and HRBPs,

    • Estimating costs,

    • Prioritizing the learning initiatives to be included in the budget,

    • Assessing cost-saving opportunities,

    • Identifying and eliminating redundant learning requests,

    • Presenting and getting feedback on the budget from stakeholders, etc.

Collecting information to inform the budget

Budgets must be informed by valid and objective data rather than a gut feeling. Here are some data you can consider that will help inform your budget:

  • Previous years' budgets (check out our Year-to-Year Budget Analysis Template from our Toolkit for L&D)

  • Organizational and functional learning needs

  • Strategic and operational plans of the organization

  • Financial performance of the organization

  • Major operating issues and concerns

  • Customer satisfaction data

  • Engagement and job satisfaction

  • Management and employee 360° feedback summaries

  • Succession plans

  • Specific projects currently in progress

Prioritizing L&D initiatives in line with business expectations

Once you have a good idea of your company's priorities, it's vital to ensure that your L&D initiatives align with these expectations. While there's no one-size-fits-all approach when it comes to prioritizing L&D initiatives, here are some questions that can help:

  • What do employees already know? It's essential to start by assessing current employees' knowledge and skills and how they can contribute to the company's success. Are they aware of their role in the company? Do they understand how they contribute?

  • What capabilities will increase the organization's chances of reaching its full potential or accomplishing its strategic goals?

  • What projects or areas are currently in focus? How will that change in the future?

Evaluating the budget

Once you've created a budget, it's important to evaluate its effectiveness. Evaluating a budget will help you understand:

  • Whether the process works for everyone and is understood by all stakeholders

  • What needs improvement to make it more effective or efficient

  • How well the project delivered on its goals and objectives

Some specific actions we recommend to assess the process' effectiveness are soliciting stakeholders' feedback and documenting all lessons learned.

Monitoring the budget

Monitoring the budget is one of the most critical parts of the budgeting process. It is necessary to ensure that your budget is meeting the needs of your business while also ensuring that you are achieving your goals. There are a few ways in which you can monitor your budget:

  • Regularly check the status of each item in your budget against their corresponding costs and benefits. This will help you identify changes in time-frames or resource requirements for each item, which may affect overall project performance.

  • Create a checklist for reviewing all projects within an entire department or section of an organization. This includes reviewing key elements such as cost estimates and financial reports to determine whether there are discrepancies between what was originally estimated and what actually occurred. Comparing actual costs against predicted ones throughout the year ensures there aren't any surprises later down the line.

  • Report the budget status to all business leaders and other important stakeholders as often as possible. This creates transparency and trust in the process. It also allows a certain freedom of decision for business leaders.

  • Quarterly compare actual costs with the budgeted ones.

  • Revise the budget often to reflect business and market changes

  • Share ongoing L&D performance (i.e., estimated vs. budgeted, ROI, etc.) with HR business partners

Keys to continued success

Your role doesn't end with finalizing the budget and getting it signed off. Take into account how you can guarantee the budget's ongoing performance throughout the year if you want it to be truly successful:

  • Regularly update the budget to reflect the quickly changing nature of the business environment.

  • Throughout the budgeting process, look for opportunities to reduce the time it takes to create the budget and spend more time supporting the business in meaningful ways.

  • To keep everyone informed of the budget's performance, share it with all major stakeholders: HRBPs, business unit executives, managers, and direct reports.


The most important thing to remember is that your L&D budget is a living document. It will change as your business changes, so it's essential to ensure that you're continually evaluating how the budget impacts your organization and making adjustments where necessary. If any significant changes are happening within your company, such as hiring new employees or restructuring departments, consider revising the L&D budget accordingly so that everyone can be supported with learning resources throughout this transition period.


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