Subject. We address proactive budgeting, based on the application of responsible and appropriate approach to the issues of local budget spending, and taking into account the interests of the population. Nowadays, there are many approaches to proactive budgeting, however, in some cases, the authors fail to explore the financial aspects.
Objectives. The aim is to provide a theoretical foundation for the nature, principles, and functions of proactive budgeting in the financial context.
Methods. The study employs the comprehensive approach and methods of systems analysis. The techniques of observation, specification, abstraction, synthesis, comparison, generalization of theoretical and practical material serve as our research tools.
Results. We justified the nature, principles and functions of proactive budgeting in the financial context. The findings can be used by the actors of proactive budgeting.
Conclusions. Proactive budgeting is a set of budget relations between government (municipal) authorities, citizens and business entities, which are based on citizens’ initiative concerning the budget planning, movement and control of budgetary funds to realize local projects. The principles of proactive budgeting include integration, initiative, competitiveness, co-financing, and transparency. Accordingly, it has communicative, analytic, coordinating, and stabilization functions.