Budgeting is the absolute first thing you do each season and it's one of the most important. Your budget will help determine how active you'll be in the Free Agent market, what caliber of international prospects you'll be able to sign and even how accurate the ratings you see will actually be.
There are nine categories of the budget
Payroll: Pretty self-explanatory. This is the amount of money you will have available to pay your major league and minor league players their salaries, pay your free agent signings their signing bonuses and pay your draftees and international free agent signings their salaries. This is not the budget for signing bonuses for international free agents and draftees. (We'll get to that in a minute). You don't actually set a number for your payroll. This number is determined by taking your total budget of $185M and subtracting the amount of money spent in every other category. You will see payrolls ranging from $25M to $130M, but most teams play with a payroll of $60-100M.
Prospect Payroll: This is the amount of money you will have to pay signing bonuses to your draft picks and international free agent signings. These players will earn the league minimum salary, so it's the signing bonus that will determine whether a player signs with you or another team. In general, it will cost between $6-8M to sign your draft picks, but this can vary dramatically if you sign "risky" draft picks who want more money than they should get for their draft slot. It can also vary if your team loses Type A or Type B free agents. That would give you more high draft picks to sign, and thus cost you more money in signing bonuses.
You can transfer money into or out of your prospect budget from your coaching or payroll budgets. However, you can only do this in increments of $2M and you lose 50% of that money each time you transfer it. For example, if you have a prospect budget of $20M and have $2M left over in your coaching budget, you can transfer that over to prospects. You'll lose $1M of it and have a resulting prospect budget of $21M. Many teams take advantage of this to sign superstar internationals. Teams in Ryan had prospect budgets ranging from $10-33M last year.
Coaches Payroll: This is the amount of money you will be able to pay your coaches. Last season, teams in Ryan World budgeted anywhere from $6M to $18M for coaches, although the majority spent between $10-12M. You can get a decent idea how much to budget by checking how many of your old coaches are interested in coming back. Go to Admin Office --> Coaching --> Rehire Coaches. In general, the more guys you have coming back at the major league level, the less money you'll likely need to spend.
When you spend this money, it's important to note that if you have money left over after coach hiring, you can transfer it to payroll or prospect budgets, but only if you have $2M or more. If you have $4M (or $6M) you can transfer it. However, if you have $1,999,999 left over in your coaching budget after you're done hiring, that money will just sit there for the rest of the year and you can't use it. If you have $3.5M left over, you'll be able to transfer the first $2M, but the next $1.5M will just sit there unused. You can only transfer money in $2M increments.
Domestic College Scouting: This will determine the number of college prospects you see as you prepare for the amateur draft in the middle of the season. It will also affect the "projected" ratings you see for each of those prospects. In general, the more you spend, the more accurate those projected ratings will be. It's important to note that there's no guarantee that the player will reach those projections. It will depend on other factors like injuries, coaching, and how fast you promote them through the minors. The projection should just give you a decent idea what to expect if everything goes pretty well for that player.
You can only change this number by $4M up or down each year, so your first year you'll only be able to set it between $6M and $14M. Your second year with the team, you'll be able to move it up or down another $4M (possibly as high as $18M).
Domestic High School Scouting: Just like the college budget, but for high school players. High school players are younger (18 years old, as opposed to 19-22 year olds from college) but are a little more "raw" and tend to take a little longer to develop. This has the same $4M up or down limit.
International Scouting: This determines how often your international scouts will let you know about a prospect and how accurate the projected ratings will be. A league can see anything from 0-10 potential superstar International prospects in a season, completely at random. You'll also see a lot of crap. The top internationals can fetch signing bonuses of $20M or more.
Advanced Scouting: This determines the "projected" ratings you will see for all of your players as well as the players of every other team. Players 27 and older don't have projected ratings any more-- those are just a duplicate of their current ratings. If you are re-building and will be trading for prospects, it's wise to have as high an advanced scouting budget as you can afford. A low number here might lead you to trade a great prospect who your scouts say is very average. Conversely, you could trade a great older player for a crappy prospect who your scouts think is great. Only one team in Ryan had a scouting budget under $10M last year. 20 of the 32 teams had advanced scouting budgets of $14M or more. This budget can only be changed by $4M in either direction each season.
Training: This helps keep your players from getting hurt. It also keeps your older players (say, those 30+ years old) from having their ratings decline too much. If you have an older team or a bunch of significant guys with lower health ratings (under 60 or so), this may be a very important category. Ryan World teams ranged from $10M to $20M in training budget last year.
Medical: This determines how long your players will be out if they get hurt. This can make a huge difference in some cases. For example, in some cases the same injury can vary from 3 months to 12 months, depending on your medical budget. It can also be the difference between a guy being out 2 days and 2 weeks. Ryan World teams ranged from $8M to $18M last year, although only one team had a medical budget over $14M. More than half of the league used a medical budget of $10M or $11M.
Hopefully this has given you a decent idea what you'll want to do when setting your budget. As always, feel free to ask myself or another veteran owner if you have any questions.
You may also want to check out some past HBD 101 posts which may prove helpful.
Managing Your Prospects
The Importance Of Planning Ahead
Manging Your Minor League Pitching Staffs
And finally... The Worst Free Agent Signings In Ryan History. This may be useful in a "what not to do" way: