IT Budgeting: A Template For A Small IT Team

IT budgeting is planning next year's technology spend line by line: people, software, devices, network, security, projects, and a reserve. For a small IT team, mark each line run or grow, price refresh from current quotes, and compare actuals with the plan at mid-year.

Below: a template to copy, a filled-in example, and a mid-year check. It comes from the team behind SherpaDesk, a helpdesk and PSA (professional services automation) a small IT team can run alone.

What Is IT Budgeting?

An IT budget is the amount of money an organization spends on its information technology systems and services. IT budgeting is planning that spend for a period, usually the fiscal year, getting it approved, and checking it as the year runs.

A standard list of IT budget components covers staff pay, office and data center space, hardware and software, utilities, operations, data storage, networking, and security. On a small team, the IT budget skips the data center and adds subscriptions, laptops, and maybe an MSP.

Whether a purchase is expensed or capitalized is finance's call; our computer depreciation guide covers the schedules.

Why An IT Budget Needs A Fresh Look In 2026

Gartner's October 2026 forecast has worldwide software spending growing 14.6% in 2027 and device spending 8.1%. Memory prices more than doubled in 12 months, and the cost increases are reaching PCs and other devices. Gartner's John-David Lovelock: "This 'memflation' effect is expected to persist through 2027 before hardware pricing begins to stabilize."

Two price changes hit small teams:

• Microsoft 365 renewals. On July 1, 2026, Microsoft raised list prices. With Teams, Business Basic went from $6.00 to $7.00, and Business Standard from $12.50 to $14.00, per user per month on an annual commitment. Business Premium stayed at $22.00. Existing customers keep their current price until renewal.

• Windows 10 stragglers. Windows 10 support ended on October 14, 2025. Extended Security Updates for organizations cost $61 per device for year one, and the price doubles each year, for up to three years.

  ESUs are cumulative: buy in year two and you pay for year one too. Year one started in November 2025, so a PC enrolled now costs $61 plus $122, or $183. Keep it past autumn 2027 and year three adds $244.

A budget built from current quotes catches both.

The IT Budget Template

Seven sections, totals, and a mid-year check. Brackets mark what you fill in; the TXT download follows the example.

IT BUDGET TEMPLATE
Enter each cost once. Mark every line RUN (keeps
today's service going) or GROW (adds or changes
something).

Organization: [company, school, or client]
Fiscal year: [start date] to [end date]
Budget owner: [name] - approves: [name]
Finance contact: [name]
Last year's actual spend: [$] - from: [ledger, card
statements, invoices]

Every line: [item] - RUN or GROW - [$ per year] -
basis: [quote, contract, last year's actual] -
paid: [monthly, or upfront in month] - quarter(s):
[Q1-Q4] - owner: [name]

1. PEOPLE
   IT staff pay and benefits: [$, from finance, or
   "held by finance"]
   Training and certifications: [$]
   MSP or outside help: [$ per month] x 12 + project
   hours [$]

2. SOFTWARE AND SUBSCRIPTIONS
   [product] - [users or devices] - [$ last year] -
   [$ at renewal] - renews: [month]
   List price changes announced: [product, %, date]
   Unused licenses removed on: [date]

3. DEVICES AND REFRESH
   Due for replacement: [count, from the device list]
   x [current quote $] = [$]
   New positions: [count] x [$ per kit] - paid by:
   [IT or hiring department]
   Out of vendor updates this year: [models, count] -
   plan: [replace, or extended updates at $]
   Repairs not under warranty: [last year's actual $]
   Spares and accessories: [$ per month] x 12

4. NETWORK AND INFRASTRUCTURE
   Internet and phone lines: [$ per month] x 12
   Network gear due: [switches, access points,
   firewall] - [$]
   Servers, hosting, cloud: [$]

5. SECURITY AND BACKUP
   Endpoint, email, and sign-in security: [$]
   Backup, with one restore test: [$]
   Cyber insurance, if IT pays it: [$]

6. GROW PROJECTS
   Only projects that fit no section above. Grow
   costs in sections 1-5 stay there, marked GROW.
   [project] - [$] - what changes: [one line] -
   start if approved by: [date]

7. CONTINGENCY
   Reserve: [$] - sized from: [last year's unplanned
   purchases]
   Released by: [name] - used so far: [$, items]
   Book each draw here only, not on the line the
   money went to.

TOTALS
   RUN [$, all RUN lines] + GROW [$, all GROW lines]
   + CONTINGENCY [$] = [$]
   Change vs last year's actual: [$, %] - main reasons:
   [lines]
   Spend by quarter, contingency not spread:
   Q1 [$] Q2 [$] Q3 [$] Q4 [$]

MID-YEAR CHECK - date: [ ]
   Spent to date: [$] - planned to date: [$]
   Lines over: [line, $, why]
   Lines under: [line, $, why]
   Renewals in the next 6 months: [product, new price]
   Contingency used: [$] of [$]
   Decisions: [move $ from line to line, approved by,
   date]
   Carry into next year: [what changed]

How To Fill In The IT Budget Template

IT budget planning goes in this order: last year's actuals, run lines, grow lines, then the reserve. The run total tells you how much room is left for anything new.

Start from last year's actual spend

Pull last year's IT spend from the ledger and card statements, not last year's budget. Name an owner, an approver, and a finance contact.

Mark every line run or grow

Run keeps today's service at today's level: renewals, replacing worn-out devices, the internet bill, security. Grow adds or changes something: new positions, a new system, a project.

Gartner's run-grow-transform framework adds a third bucket, and CIOs often use it to report technology spend. Gartner notes that run-grow-transform allocations often fail to balance growth initiatives with protecting "foundational IT capabilities, such as cybersecurity or IT modernization." So in this template, security and refresh are always run.

A small team doesn't need a third bucket. Enter each cost once: a grow cost that fits sections 1 to 5 stays there, marked GROW, and section 6 holds only standalone projects, such as an office move.

It also settles who pays for growth. One r/ITManagers member: "Newly created positions. This is growth. The hiring department pays for new equipment." Another member's rule is that new positions must include "funding for computer equipment" and "future funding for our CIP computer replacement fund."

Price software at the renewal price

List each subscription with its user count, last year's cost, and the cost at renewal. Note the renewal month, because that's when a list increase hits. Count active users against seats and remove unused licenses before that month.

Build refresh from the device list

Count the devices due from your device list and multiply by a current quote, not book value. Cycle length and refresh triggers are in our asset lifecycle management guide. Add devices that lose vendor updates this year: replace them, or pay for extended updates. Keep warranty end dates on each record; see warranty tracking.

For spares, one r/ITManagers member with about 50 workstations: "I have a budget of $200 a month for discretionary things like cables, keyboards etc."

Size the contingency from last year's surprises

Add up last year's unplanned purchases on lines IT carries: the failed switch, the emergency firewall, the license true-up. Lost and stolen devices stay out; their department pays. That sum is your first reserve, a number your approver can check.

Name one person who can release it. Book each draw on the contingency line only, not on the line the money went to. One r/ITManagers member runs it this way: "Any significant unexpected purchases (outside of a contingency buffer I build in to each budget) are discussed between me, finance, and our bosses."

Spread the total by quarter

Put each line in the quarter you'll pay it, and leave the contingency unspread. That split is what you compare against at mid-year.

Who Pays For Which Line

Segmenting an IT budget means deciding which lines IT carries and which go to the department that caused them.

The lifecycle rows borrow one r/ITManagers member's rule: "Lifecycle replacements are on IT's budget. Out of band replacements (when a lifecycle replacement is not needed) are on the department's budget." Another keeps security central so "managers don't think they have a choice to avoid" tools like EDR. For who owns each area of work, see the IT department structure guide.

Example: A Filled-In IT Budget

Example: Northgate Supply has 120 employees and two IT staff, and builds its IT budget for January 1 to December 31, 2027 in November.

Budget owner: Dana, the IT lead. Approver: the CFO. Finance contact: the controller. Pay sits with finance.

Last year's actual spend was $129,400.

Both grow lines sit in their own sections, so Northgate's section 6 is empty. The total is $9,100 above last year's actual, or 7.0%. Dana's main reasons:

• Microsoft 365 renewal: +$2,160
• Windows 10 extended updates, a new line: +$1,098
• Refresh, 30 laptops instead of 28: +$2,200
• Grow lines, $10,500 against $6,000 last year: +$4,500
• Everything else, net: −$858

The plan for January to June is $69,400 (Q1 plus Q2).

The Mid-Year IT Budget Check

At mid-year, compare what you've spent with what you planned to spend by now, line by line. Tennessee's Comptroller tells local governments that board members should get "a monthly budget to actual report," and that "the budget must be amended prior to increased spending." Start with the pace:

A pace above your total tells you to open the lines, not to cut. At June 30, Northgate has spent $73,900 against a plan of $69,400. Its pace says $147,800 against $138,500, but it bought 18 of its 30 laptops by June against 15 planned: $3,300 of timing. Then work through the template's mid-year block:

1. Lines over and under. Northgate: laptops +$3,300 (timing); contingency +$2,900 for a failed switch, booked on the contingency line only; conference room cabling −$1,700 (not started). Net: $4,500 over the $69,400 plan.
2. Renewals and unused licenses. Price the next six months of renewals at new prices, and cut idle seats first.
3. Devices failing early. A model that keeps returning to the helpdesk may join next year's refresh.
4. Contingency used. Northgate has used $2,900 of $6,800, leaving $3,900.
5. Decisions, in writing. Northgate moves the conference rooms to Q4, approved by the CFO on July 8.

IT Budgeting For Schools And MSP Clients

Schools. Budgets have been the top challenge for district technology leaders in 12 of the 13 years CoSN has asked. With emergency funding gone, 42% of respondents see classroom technology refresh at risk, 39% devices, and 29% cybersecurity. About a quarter of districts, 26%, still worry about paying for software licenses. CoSN's figures come from 607 survey responses collected January to March 2026.

In one district technology budget shared on r/ITManagers, Chromebooks take half: "I have a 900k budget. 450k goes to Chromebooks." Use the same template with the district's fiscal year.

E-Rate is a discount, not a grant: 20% to 90%, depending on the service, and the school pays the rest. Budget the full cost, the discount, and your share; a 90% discount on $1,000 leaves $100. Our IT support for schools guide covers E-Rate rules.

MSP clients. In MSP IT budgeting, the client owns the plan and you bring the numbers: devices due, renewals, projects. Fill one template per client for a vCIO meeting or a quarterly business review; grow lines are proposals the client can refuse.

Common IT Budgeting Mistakes

Copying last year plus a percentage. It misses new list prices and devices losing updates.

Budgeting refresh from book value. A fully depreciated laptop still costs a full quote.

Hiding growth in run. A new system tucked into "software" can't be judged on its merits.

A reserve without an owner. If anyone can spend it, it's gone by spring.

Checking once a year. By December, an overspend is a done deal.

Get The Numbers From Your Helpdesk

About the author

Patrick Clements Co-founder & CEO, SherpaDesk

Patrick co-founded SherpaDesk and has led it as CEO since 2013. He has worked with IT service providers since 1998, first on network projects for schools and government offices, then on the helpdesk software their technicians use every day.

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