To set up a Google AdWords budget, it's important that you understand exactly what your requirements are for your AdWords campaigns.  Many new advertisers wish to start off with a small budget, just spending a few pounds per day until they can demonstrate Return on Investment.

So, in order to set a budget, you need to first ascertain how will you be measuring results?  Ideally you will need to to track inbound leads or sales, known in Google AdWords as conversions. 

You will then need to set up a target Cost Per Acquisition that you can work towards.  For example, are you willing to pay £5 per conversion?  Or £100 per conversion?  Only you can decide as you will know what the profit is on each customer you acquire.  This will also depend on your lead conversion, and how good you are at converting leads into new clients.  In the case of ecommerce clients, you may wish to consider other marketing methods such as email marketing in order to boost the lifetime value of a client to you.

You then need to move your AdWords campaigns towards this Cost Per Acquisition (CPA).  You can do this by optimising the account carefully over time, splitting the ad groups up further into smaller groups and constantly split testing your adverts.  Over time the CPA should fall.

When you have hit the required CPA, you should now be able to increase your budget as high as you wish.  The sky is now your limit.  Do remember though, that competitors up their game, and it won't be long before they are snapping at your heels.