There is no right budget. There is, however, a right budgeting formula. But before getting to this formula, I want you to consider writing an indie film budget like you would write a script. A widely renowned writer once told me his trick to knowing when a scene is complete. It is when if he removes one additional word, the scene no longer makes sense. The exact rule applies to making a skeletal budget. You price your film at the lowest possible cost, beneath which it cannot be made, and then you hide that budget. This anemic budget is your dirty little secret. It is to be placed in the back of your closet where no one except the moths can find it until you are forced to bring it out again. Until such time, you follow this formula:
2. The Sexy.
You take the budget your director wants in a perfect world, and you cut it as much as possible. From that draft, you then deduct the value of the film in the marketplace that you can get out of foreign sales depending on the world economy and politics of the day (for example, right now Russia, Italy, and Spain are virtually valueless).
Then you add the tax credits you can get depending on your shooting location. If the budget at that point is below $1,000,000 and your lead is based in Los Angeles, you shoot in Los Angeles. If it is below $5,000,000, you consider New Orleans. If its over $10,000,000 consider buying the book "Romanian for Dummies" and get a passport. Then you add to this budget $1,000,000, assuming a respectable U.S. sale once the film is finished and working its way through the domestic festival circuit.