Preparing and Managing Your First Lab Budget: Finance 101 for New Investigators

When it comes to practical matters such as managing money, scientific training seems woefully inadequate. Although you may be an ace at balancing your personal checkbook each month, this doesn't mean that you are automatically qualified to prepare a scientific budget. If your budget is not realistic or in line with other current grants, you could run into serious stumbling blocks during the grant review process.

The need for financial savvy doesn't stop once you get a grant. You must be able to manage your money by neither overspending nor underspending your allocation. We've all heard budget horror stories, such as the one about the assistant professor who spent 2 years' worth of supply money in his first 9 months and had to resort to reusing pipette tips. And then there's the tale of the new investigator who underspent her supply money and lost surplus funds because she didn't realize her funding agency wouldn't allow her to carry them over to the next year.

Fortunately, these situations seldom occur. With common sense, a bit of research, and the tips listed below, a new investigator can prepare a realistic budget and manage it successfully.

Preparing the Budget for Your First Big Grant

1. Tackle the Science or the Budget First?

Because science is the most important part of your grant proposal and will largely determine whether it is funded, many investigators write the scientific sections first. But writing the budget first can have advantages. Edward Giniger, an associate member of basic sciences at the Fred Hutchinson Cancer Research Center (FHCRC) in Seattle, prefers to put together a rough budget before he writes the proposal: "I determine my budget first. Then I propose a coherent set of experiments that fit the budget." The budget-first approach helps keep the proposed work in line with the available money.

2. Learn the All-Important Magic Numbers

Some granting agencies provide no guidelines for the amount of money you can request in your budget. But there are unofficial figures for key parts of the budget that are generally followed by grant reviewers. These unacknowledged figures are the "magic numbers" that will make your budget acceptable to the study section. Two especially important numbers are

  • the total amount per year that a first-time investigator can request, and

  • the allowable supply budget per person per year.

It may be most practical to get these numbers from your colleagues instead of the actual granting agency, which may deny that such "magic numbers" even exist. If you get these figures, your budget will have a better chance of getting approved. Numbers significantly above or below the accepted ones will raise a red flag for the entire application. "Staying within these figures, my budgets were never questioned," says Giniger.

Overall, your budget must match your proposed work. If your budget is too low, the study section reviewing your grant proposal will penalize you for being unrealistic or overly ambitious. Proposing to do far more work than your requested funds can support is a frequent criticism of inexperienced investigators' grant applications. On the other hand, if your budget is too high, your proposal will not be competitive with other grants that propose similar types of experiments for less money. "The grant situation today is so competitive," says Jonathan Graves, a new assistant professor of immunology at the University of Washington in Seattle, who recently received funding for his first National Institutes of Health (NIH) R01 Individual Research Project Grant. "There is an element of feeling like you're bidding for a construction project with the lowest bid getting awarded the grant. You must strike a difficult balance between what is appropriate and what is competitive."

The magic numbers will be lower for first-time applications than for grant renewals. In addition, the numbers will vary according to the field of research. Some specialties require higher supply funds because they rely on more expensive research technologies. For example, the annual "magic numbers" for a mouse geneticist who works with knockout lines will be substantially higher than for a yeast geneticist.

3. You Can't Do It Without Help

"The first thing I did was ask people if I could look at their budget pages," says Graves. Be sure to request pages from colleagues in your field. Their budgets can serve as templates and be adapted to your particular needs. "Do not ask other beginning investigators for their budgets--they may be as clueless as you. Talk to intermediate-level investigators who have already obtained several grants and are actively participating in study sections," advises Giniger.

Also, do not overlook the seminars and workshops for new faculty members offered by your institution's grants office. At the very least, you'll meet administrators in the grants office and other new faculty members with similar concerns. These people may be good sources of information and advice in the future.

4. How to Calculate Salaries, Supplies, and Equipment

How many people does your budget need to support? Knowing the answer to this question will go a long way toward setting your budget, because salaries usually account for about 80% of requested funds. One difficulty new investigators have is that they usually haven't hired the personnel they need by the time they write their first couple of grant proposals. Nonetheless, they must calculate the amount of funds for the staff they intend to hire. To do this:

  • Assign an actual dollar amount for each position (e.g., you, a technician, a postdoc).

  • Calculate the percentage of salary support for each anticipated individual (e.g., 50% salary for you, 100% for the technician, and 100% for the postdoc).

  • Add the numbers up. Then, multiply this sum by your institution's standard amount for fringe benefits (usually between 17% and 30%). The final total for salary (including fringes) should not exceed 80% of the annual magic number.

  • Add the "supplies per bench scientist per year" amount to calculate the total supply budget. It is standard in most grants to also add a 4% annual inflationary increase in expenses for supplies and salaries.

Get quotes from vendors on any laboratory equipment that is not covered by your start-up package. Some agencies are more willing to fund equipment purchases in the first grant than in renewals, but this is not universally true. In the proposal's budget justification section, you must explain why you need each piece of equipment and must justify the overall supply budget. The NIH's new modular research grant system requires only a streamlined justification in the grant application, but most other agencies still require the full details.

Managing Your Budget

Once your proposal is funded, you may think your money concerns are over. Not true! Now, you need to control your actual spending rate so that it matches available funds. The fact that your estimated cost of laboratory supplies matched one of the magic numbers you learned from colleagues doesn't mean that it truly reflects the day-to-day costs of operating your lab.

1. Monitor Spending on a Monthly Basis

You will probably receive a monthly report from your grants office or department. This report may or may not be interpretable. Some institutions do offer classes in how to read these reports and may also provide training in using in-house grant-tracking software. But many investigators prefer to keep their own books, using simple spreadsheets in Excel or Quicken to track their expenditures. (Not only is Excel easier to use, but you'll have the advantage of having CURRENT information, not just a summary of LAST month's expenses.) There are also commercially available software programs designed for monitoring grant budgets, such as Grant Manager and Grant Tracker.

Many organizations use a budgeting trick called "calendarizations," which is very easy to adapt to a scientific budget. This allows you to budget basic necessities, such as reagents and salaries, on a regular monthly basis. (Annual supplies in all categories divided by 12 = monthly spending.) It also allows you to plan and budget, for example, an extra $10K for the month of September to buy a reconditioned microscope. Calendarizations can be a very effective way to track how much you are overspending or underspending during any given month and for the year to date.

2. Overspending? Look for a Second, Smaller Grant

If you are consistently overspending your monthly supply budget and cannot seem to reduce costs, then you may need a second grant. Smaller grants that cover supplies are available from a number of agencies, and some are specifically targeted at new investigators. A small grant can also be a springboard to a second larger grant in the future.

"Try to get at least one small grant," advises Nancy Hollingsworth, an assistant professor of biochemistry and cell biology at the State University of New York, Stony Brook. Hollingsworth's lab receives support from both an NIH R01 and a Basil O'Connor Starter Award from the March of Dimes. "It's very hard to grow on a single R01," she says. "Your second, smaller grant can include specific aims not addressed in your main grant. Later, you can try for a second R01 or large research grant from another agency that is based on these independent aims."

Another approach is being taken by Maureen Ryan, an FHCRC staff scientist and an acting assistant professor of dermatology at the University of Washington. Ryan received of a Career Development Award from the Dermatology Foundation and will apply for her first NIH R01 later this year. She advises learning "to make use of limited resources by establishing collaborations and planning carefully--figure out how to kill two birds with one stone whenever you do an experiment."

3. Know Your Grant

If you are underspending your budget each month, then you will have a pile of money left at the end of the year. Assuming that you can carry this money over to next year's budget can be a costly mistake. Some granting agencies allow carryover, but some do not; so check at least 4 or 5 months before your granting cycle is scheduled to end.

Another way to avoid underspending is to switch some of your supply money to equipment or travel. Whether this is permitted is, again, grant-dependent. Some grants, such as R01s, have so-called "undistributed budgets" that allow relatively free exchange between budget categories. However, grants of the "distributed" budget type are not as flexible.

Advice to Postdocs and Graduate Students

1. Learn Now, Not Later

Researchers who are planning to follow the academic research track should start thinking about grants and budgets before they secure faculty positions. "If you are already a new faculty member, it is too late to be learning these things," says Giniger. By helping write grant proposals for their labs and participating in budget discussions as students and postdocs, both Giniger and Graves gained valuable experience before becoming faculty members. "I would not have been able to get my R01 on the first attempt without this experience," says Graves.

Even if you are not invited to help write your lab's grant proposals, you can still pick up valuable information in other ways. "As a postdoc, you should listen and learn," advises Giniger. "Make a point of talking to people a few years ahead of you. Learn how much it costs to run a lab, how much to buy supplies."

2. Ask Your Mentor

Take advantage of your mentor's experience by initiating discussions about grants and budgets even if he or she doesn't. Most advisers are happy when their trainees follow in their footsteps by choosing a traditional academic career path, so they will probably be pleased to impart their wisdom.

Megan T. Brown has a Ph.D. in genetics and works as a science writer in Seattle, Washington. She can be reached at

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