How do you handle a job interview question in which you have no experience?

For example, the job interviewer asks your experience on budgeting, but you have little or no experience with it. How do you answer the question?

Answers:
Be honest.

In the case you noted above, the interviewer says "Do you have any experience in budgeting?" you can respond like this.

No, I don't have any formal experience in budgeting, but I did work within budgets while attending school, preparing to purchase a car, etc. and although I know that they are not the same in terms of details, the concept of researching out the income and expense limits and working within them is the same.

The worst thing you can do is lie, and this is for three reasons. First, it's unethical. Second, if you don't know budgets and that is what you end up doing for the majority of your job, it's going to show (and usually in a really bad way). Third, if you end up doing budgets and you can do them but hate them, you're stuck doing a job that you hate.

Anyway, good luck!
If this is a requirement for the job, you will be in trouble if you have no experience. If this is a management position, budget responsibility usually goes with the territory, so if you've been in management without gaining experience in budgeting, you will be at a disadvantage. You may be able to extrapolate from experiences in managing the financial impact of your work. Or, if you've clearly held more junior positions in the past, you can say just that, but indicate that you've a keen interest in the subject and have sought as much knowledge as possible.
Say you are eager to learn and are easily taught.
I think you're going to have to tell the truth and say you have no actual experience in it. If the interviewer asks you and you convince him you have experience when you do not, it will show further down the line in some form or another. Believe me I know.

You could also add "I am more than willing to learn about the use of budgeting in this role and won't let you down." Or something along those lines.

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