How to Set Up Azure Budgets and Alerts the Smart Way

Nobody likes an unexpected bill - especially when it comes from Azure. But with a few quick steps, you can set up budgets and alerts that give you more control and fewer surprises.

This guide walks you through setting budgets, creating alerts, and keeping cloud costs in check - drawing on both Microsoft’s best practices and some real-world tips we’ve picked up

along the way.

1. Select the Scope for Your Budget

Go to the Azure Portal. Search for “Cost Management + Billing”

In the left-hand menu, select: Cost Management → Monitoring → Budgets

At the top of the Budgets screen, click the Scope button

Now choose where your budget should apply:

● A Management group (e.g., Connectivity, Identity)

● A Subscription

● A Resource group

Scopes define which Azure resources your budget will cover. Once you’ve selected one,

you’ll return to the Budgets screen scoped to that level.

2. Create a New Budget

Click + Add

Give your budget a name, set the reset period (monthly, quarterly, annually), and choose a start and end date

Then enter your budget amount (e.g., £1,000/month)

Azure will now track your actual costs against this amount for the selected scope.

Tip: Start small for non-production environments. A £200 monthly budget can help catch

forgotten VMs or resources.

3. Set Alert Thresholds 

Azure lets you define alert conditions based on two options:

● Actual – Triggers when your real spending reaches a certain percentage of your

budget

● Forecasted – Triggers when Azure predicts you will hit that percentage before the

end of the period

You can enter multiple thresholds, such as:

● Actual spend at 80% – early warning

● Forecasted spend at 100% – act before overrun

Each alert can notify:

● Specific email addresses

● Action Groups (which can trigger tickets, Teams messages, or automation like

shutting down VMs)

4. Monitor and Adjust 

Under Cost Management → Cost Analysis you can:

● Track your current spend against your budget

● Forecast your month-end totals

● Identify your top spending resources

You can adjust your budget or alert thresholds anytime to reflect changing usage.

Bonus: Use Anomaly Detection

Azure also includes cost anomaly detection, which automatically alerts you when it spots unusual spikes in spending - even if your budget hasn’t been hit yet.

Find it under: Cost Management → Cost Alerts → Anomaly Detection

Best Practices

Here are a few best practices to help you get the most out of Azure Budgets and keep things running smoothly:

● Create separate budgets for production, dev, and test.

● Use resource tags (e.g., cost centre, project, owner) to group and track usage.

● Use Action Groups to automate common responses.

● Review budgets monthly as part of a cost control process.

Quick Azure Budgets FAQ 

We often get asked these questions, if you have another question, please feel free to get in touch. We’re always happy to help.

Can budgets stop resources automatically?

Not directly, but alerts can trigger automation using Logic Apps or Runbooks.

Do budgets include reservation or savings plan discounts?

Yes - budgets reflect actual billed costs, including applied discounts.

Can I alert people outside Azure?

Yes - just add their email address when creating the alert. No Azure account is required.

Azure Budgets and Alerts are simple, powerful tools to help your team stay on top of cloud costs. They increase visibility, prevent surprises, and give you the power to act before things go wrong.

Take 15 minutes today to set up your first budget. It’s a small step that could save you a big headache later on.

Want to go a step further?

If you’re unsure whether your cloud environment is running as efficiently as it could be, it might be time to consider a Well-Architected Review. It’s a structured way to assess your current setup, identify areas for improvement, and align your cloud strategy with best practices.