A partial budget consists of two columns, a subtotal for each column and a grand total. The left hand column has the items that increase income while the right hand column notes those that reduce income for a farm business. The budget can be divided into four parts.

1. Added Income This area is usually an estimate if a new enterprise is to be added. Use realistic yields, product quality and prices. Over estimation may lead to incorrect decisions and possibly reduced financial performance when the change is meant to improve it. When deciding on a projected price, use average prices from the markets where production is most likely to be sold. Also use average quality unless the change under consideration is meant to improve crop or livestock quality.

2. Added Costs This is the first section of Column 2. List all increased expenses due to the change being considered. Most of these will be costs of production for the new enterprise. This list may also include non-cash costs such as labor and depreciation. For example, it might be appropriate to include unpaid labor to be certain that the operator is equitably paid for his/her labor and management input. A depreciation charge, if included, will help analyze whether there is a return on the investment that the operator makes.

3. Reduced Costs Obvious items for inclusion in this section would be crop or livestock expenses no longer incurred. These costs could be reductions or total elimination of certain expenses. Examples include seed, custom work, repairs, veterinary expense, interest expense and paid labor. Inclusion of non-cash costs such as unpaid labor and depreciation would provide a full economic analysis instead of just changes in cash costs.

4. Reduced Income Items to include here might be reductions in product sales, such as corn, feeder pigs, apples or milk, rental income, custom work income, or USDA payments. Another consideration here may be reductions in yields due to reduced planting or harvest timeliness. When custom operators are used or ownership of equipment is shared, some cropping operations may not be completed in as timely a manner as desired in some years. This can reduce quality and yields that reduce farm income. Accurately estimating this factor can be difficult, however.