A narrative portion of the budget is used to explain any unusual line items in the budget and is not always needed. If costs are straightforward and the numbers tell the story clearly, explanations are redundant.
If you decide a budget narrative is needed, you can structure it in one of two ways. You can create "Notes to the Budget," with footnote-style numbers on the line items in the budget keyed to numbered explanations. If an extensive or more general explanation is required, you can structure the budget narrative as straight text. Remember though, the basic narrative about the project and your organization belongs elsewhere in the proposal, not in the budget narrative.