Budgeting models are essentially a mathematical formula used to regulate the money in and money out for persons, businesses and communities. The basis for a budgeting model is to provide a specific guide of money earned versus money spent to the end result of a profit. There are several types of budgeting models that can be utilized.

The participatory budgeting model is a model most commonly used in government. The participatory model is a process of democratic deliberation and decision-making. The people making the decisions are ordinary residents of the town or city and they use their vote to determine how to allocate funds that are part of a municipal or public budget. There are several features to this model such as: implementation of local direct-impact community project, deliberate and vote on spending priorities, identification of spending priorities by community members, and election of budget delegates to represent different communities. This type of public budgeting model lets the people who live and work in the community decide how and where money in the local budget is allocated so that the projects and issues important to the citizens are addressed.

Some studies suggest that this budgeting model does not result in higher quality of life, increased satisfaction of basic needs, or greater government accountability, but this framework can be a base for a new type of public budgeting model called the performance based budgeting model.

The performance based budgeting models build upon the participatory budgeting model by using goals objectives, and mission statements to explain how and why the money is being spent. This puts the result of the spending as the bottom line to justify the choices of the government that is spending the money. What performance based budgeting is concerned with is the result, the strategy, and the activity or outputs what is being done to achieve the final outcome. This framework for a budget makes community projects more feasible when the money is in the budget.