diff --git a/litellm/proxy/management_endpoints/customer_endpoints.py b/litellm/proxy/management_endpoints/customer_endpoints.py
index dfc36bf6c4..c653b3baf8 100644
--- a/litellm/proxy/management_endpoints/customer_endpoints.py
+++ b/litellm/proxy/management_endpoints/customer_endpoints.py
@@ -417,7 +417,7 @@ async def update_end_user(
     ```
     """
 
-    from litellm.proxy.proxy_server import prisma_client
+    from litellm.proxy.proxy_server import litellm_proxy_admin_name, prisma_client
 
     try:
         data_json: dict = data.json()
@@ -459,19 +459,29 @@ async def update_end_user(
         budget_table_data = {}
         update_end_user_table_data = {}
         for k, v in non_default_values.items():
-            if k in LiteLLM_BudgetTable.model_fields.keys():
+            # budget_id is for linking to existing budget, not for creating new budget
+            if k == "budget_id":
+                update_end_user_table_data[k] = v
+            elif k in LiteLLM_BudgetTable.model_fields.keys():
                 budget_table_data[k] = v
 
-            if k in LiteLLM_EndUserTable.model_fields.keys():
+            elif k in LiteLLM_EndUserTable.model_fields.keys():
                 update_end_user_table_data[k] = v
 
-        ## Check if budget id is set ##
+        ## Check if we need to create a new budget (only if budget fields are provided, not just budget_id) ##
         if budget_table_data:
             if end_user_budget_table is None:
                 ## Create new budget ##
                 budget_table_data_record = (
                     await prisma_client.db.litellm_budgettable.create(
-                        data=budget_table_data, include={"litellm_endusertable": True}
+                        data={
+                            **budget_table_data,
+                            "created_by": user_api_key_dict.user_id
+                            or litellm_proxy_admin_name,
+                            "updated_by": user_api_key_dict.user_id
+                            or litellm_proxy_admin_name,
+                        },
+                        include={"end_users": True},
                     )
                 )
 
diff --git a/tests/test_litellm/proxy/management_endpoints/test_customer_budget.py b/tests/test_litellm/proxy/management_endpoints/test_customer_budget.py
new file mode 100644
index 0000000000..4a24e94dde
--- /dev/null
+++ b/tests/test_litellm/proxy/management_endpoints/test_customer_budget.py
@@ -0,0 +1,343 @@
+"""
+Unit tests for customer budget operations.
+
+Tests customer update functionality related to budget management:
+- Linking customers to existing budgets via budget_id
+- Creating new budgets for customers with proper field validation
+- Budget creation with required metadata fields
+- Proper database relationship handling
+"""
+
+import pytest
+from unittest.mock import AsyncMock, MagicMock, patch
+
+from litellm.proxy._types import (
+    LiteLLM_BudgetTable,
+    LiteLLM_EndUserTable,
+    UpdateCustomerRequest,
+)
+from litellm.proxy.auth.user_api_key_auth import UserAPIKeyAuth
+from litellm.proxy.management_endpoints.customer_endpoints import update_end_user
+
+
+@pytest.fixture
+def mock_user_api_key_dict():
+    """Mock user API key auth object."""
+    mock_auth = MagicMock(spec=UserAPIKeyAuth)
+    mock_auth.user_id = "test-admin-user"
+    return mock_auth
+
+
+@pytest.fixture
+def mock_existing_customer():
+    """Mock existing customer data."""
+    return MagicMock(spec=LiteLLM_EndUserTable)
+
+
+@pytest.fixture
+def mock_budget_table():
+    """Mock budget table data."""
+    return MagicMock(spec=LiteLLM_BudgetTable)
+
+
+@pytest.mark.asyncio
+@patch('litellm.proxy.proxy_server.prisma_client')
+@patch('litellm.proxy.proxy_server.litellm_proxy_admin_name', 'admin')
+async def test_update_customer_with_budget_id(
+    mock_prisma_client,
+    mock_user_api_key_dict,
+    mock_existing_customer
+):
+    """
+    Test updating a customer to link them to an existing budget using budget_id.
+    
+    When only budget_id is provided (no budget creation fields), the customer
+    should be linked to the existing budget without creating a new one.
+    """
+    # Arrange
+    mock_existing_customer.model_dump.return_value = {
+        "user_id": "test-user",
+        "blocked": False,
+        "litellm_budget_table": None
+    }
+    
+    mock_prisma_client.db.litellm_endusertable.find_first = AsyncMock(
+        return_value=mock_existing_customer
+    )
+    
+    mock_updated_user = MagicMock()
+    mock_updated_user.model_dump.return_value = {
+        "user_id": "test-user", 
+        "budget_id": "existing-budget-123",
+        "blocked": False
+    }
+    
+    mock_prisma_client.db.litellm_endusertable.update = AsyncMock(
+        return_value=mock_updated_user
+    )
+    
+    # Create update request with only budget_id (no other budget fields)
+    update_request = UpdateCustomerRequest(
+        user_id="test-user",
+        budget_id="existing-budget-123"
+    )
+    
+    # Act
+    await update_end_user(update_request, mock_user_api_key_dict)
+    
+    # Assert
+    # Verify that update was called on end user table with budget_id
+    mock_prisma_client.db.litellm_endusertable.update.assert_called_once()
+    call_args = mock_prisma_client.db.litellm_endusertable.update.call_args
+    
+    # Check that budget_id is in the update data for end user table
+    update_data = call_args[1]['data']  # kwargs['data']
+    assert 'budget_id' in update_data
+    assert update_data['budget_id'] == "existing-budget-123"
+    
+    # Verify that NO budget creation was attempted
+    assert not mock_prisma_client.db.litellm_budgettable.create.called
+
+
+@pytest.mark.asyncio
+@patch('litellm.proxy.proxy_server.prisma_client')
+@patch('litellm.proxy.proxy_server.litellm_proxy_admin_name', 'admin')
+async def test_update_customer_creates_budget_with_proper_relations(
+    mock_prisma_client,
+    mock_user_api_key_dict,
+    mock_existing_customer
+):
+    """
+    Test that creating a new budget for a customer uses proper database relations.
+    
+    When budget creation fields are provided, the system should create a budget
+    with correct database relationship includes.
+    """
+    # Arrange
+    mock_existing_customer.model_dump.return_value = {
+        "user_id": "test-user",
+        "blocked": False,
+        "litellm_budget_table": None
+    }
+    
+    mock_prisma_client.db.litellm_endusertable.find_first = AsyncMock(
+        return_value=mock_existing_customer
+    )
+    
+    # Mock budget creation
+    mock_created_budget = MagicMock()
+    mock_created_budget.budget_id = "new-budget-456"
+    mock_prisma_client.db.litellm_budgettable.create = AsyncMock(
+        return_value=mock_created_budget
+    )
+    
+    # Mock end user update
+    mock_prisma_client.db.litellm_endusertable.update = AsyncMock(
+        return_value=MagicMock()
+    )
+    
+    # Create update request with budget creation fields (not just budget_id)
+    update_request = UpdateCustomerRequest(
+        user_id="test-user",
+        max_budget=100.0,  # This triggers budget creation
+        rpm_limit=200  # Use valid budget field
+    )
+    
+    # Act
+    await update_end_user(update_request, mock_user_api_key_dict)
+    
+    # Assert
+    # Verify budget creation was called with correct include field
+    mock_prisma_client.db.litellm_budgettable.create.assert_called_once()
+    call_args = mock_prisma_client.db.litellm_budgettable.create.call_args
+    
+    # Check that include uses correct relation name "end_users"
+    include_param = call_args[1]['include']  # kwargs['include']
+    assert 'end_users' in include_param
+    assert include_param['end_users'] is True
+
+
+@pytest.mark.asyncio
+@patch('litellm.proxy.proxy_server.prisma_client')
+@patch('litellm.proxy.proxy_server.litellm_proxy_admin_name', 'admin')
+async def test_update_customer_creates_budget_with_required_fields(
+    mock_prisma_client,
+    mock_user_api_key_dict,
+    mock_existing_customer
+):
+    """
+    Test that creating a budget for a customer includes all required metadata fields.
+    
+    Budget creation should include created_by and updated_by fields for proper
+    audit trail and data integrity.
+    """
+    # Arrange
+    mock_existing_customer.model_dump.return_value = {
+        "user_id": "test-user",
+        "blocked": False,
+        "litellm_budget_table": None
+    }
+    
+    mock_prisma_client.db.litellm_endusertable.find_first = AsyncMock(
+        return_value=mock_existing_customer
+    )
+    
+    # Mock budget creation
+    mock_created_budget = MagicMock()
+    mock_created_budget.budget_id = "new-budget-789"
+    mock_prisma_client.db.litellm_budgettable.create = AsyncMock(
+        return_value=mock_created_budget
+    )
+    
+    # Mock end user update
+    mock_prisma_client.db.litellm_endusertable.update = AsyncMock(
+        return_value=MagicMock()
+    )
+    
+    # Create update request with budget creation fields
+    update_request = UpdateCustomerRequest(
+        user_id="test-user",
+        max_budget=200.0
+    )
+    
+    # Act
+    await update_end_user(update_request, mock_user_api_key_dict)
+    
+    # Assert
+    # Verify budget creation was called with required fields
+    mock_prisma_client.db.litellm_budgettable.create.assert_called_once()
+    call_args = mock_prisma_client.db.litellm_budgettable.create.call_args
+    
+    # Check that created_by and updated_by are present in creation data
+    creation_data = call_args[1]['data']  # kwargs['data']
+    assert 'created_by' in creation_data
+    assert 'updated_by' in creation_data
+    
+    # Verify the values are set correctly
+    assert creation_data['created_by'] == "test-admin-user"
+    assert creation_data['updated_by'] == "test-admin-user"
+    
+    # Verify budget fields are also included
+    assert 'max_budget' in creation_data
+    assert creation_data['max_budget'] == 200.0
+
+
+@pytest.mark.asyncio
+@patch('litellm.proxy.proxy_server.prisma_client')
+@patch('litellm.proxy.proxy_server.litellm_proxy_admin_name', 'admin')
+async def test_update_customer_budget_creation_with_fallback_admin(
+    mock_prisma_client,
+    mock_existing_customer
+):
+    """
+    Test budget creation falls back to admin name when user_id is not available.
+    
+    When the requesting user's ID is None, the system should use the configured
+    proxy admin name for created_by and updated_by fields.
+    """
+    # Arrange - user with None user_id
+    mock_user_api_key_dict = MagicMock(spec=UserAPIKeyAuth)
+    mock_user_api_key_dict.user_id = None
+    
+    mock_existing_customer.model_dump.return_value = {
+        "user_id": "test-user",
+        "blocked": False,
+        "litellm_budget_table": None
+    }
+    
+    mock_prisma_client.db.litellm_endusertable.find_first = AsyncMock(
+        return_value=mock_existing_customer
+    )
+    
+    # Mock budget creation
+    mock_created_budget = MagicMock()
+    mock_created_budget.budget_id = "new-budget-fallback"
+    mock_prisma_client.db.litellm_budgettable.create = AsyncMock(
+        return_value=mock_created_budget
+    )
+    
+    # Mock end user update
+    mock_prisma_client.db.litellm_endusertable.update = AsyncMock(
+        return_value=MagicMock()
+    )
+    
+    # Create update request with budget creation fields
+    update_request = UpdateCustomerRequest(
+        user_id="test-user",
+        max_budget=150.0,
+        tpm_limit=1000  # Add another budget field
+    )
+    
+    # Act
+    await update_end_user(update_request, mock_user_api_key_dict)
+    
+    # Assert
+    # Verify budget creation was called with fallback admin name
+    mock_prisma_client.db.litellm_budgettable.create.assert_called_once()
+    call_args = mock_prisma_client.db.litellm_budgettable.create.call_args
+    
+    creation_data = call_args[1]['data']  # kwargs['data']
+    assert creation_data['created_by'] == "admin"  # litellm_proxy_admin_name
+    assert creation_data['updated_by'] == "admin"
+
+
+@pytest.mark.asyncio
+@patch('litellm.proxy.proxy_server.prisma_client')
+@patch('litellm.proxy.proxy_server.litellm_proxy_admin_name', 'admin')
+async def test_update_customer_with_budget_id_and_creation_fields(
+    mock_prisma_client,
+    mock_user_api_key_dict,
+    mock_existing_customer
+):
+    """
+    Test customer update when both budget_id and budget creation fields are provided.
+    
+    When both linking (budget_id) and creation fields are provided, the system
+    should prioritize creating a new budget and assign its ID to the customer.
+    """
+    # Arrange
+    mock_existing_customer.model_dump.return_value = {
+        "user_id": "test-user",
+        "blocked": False,
+        "litellm_budget_table": None
+    }
+    
+    mock_prisma_client.db.litellm_endusertable.find_first = AsyncMock(
+        return_value=mock_existing_customer
+    )
+    
+    # Mock budget creation
+    mock_created_budget = MagicMock()
+    mock_created_budget.budget_id = "new-budget-combo"
+    mock_prisma_client.db.litellm_budgettable.create = AsyncMock(
+        return_value=mock_created_budget
+    )
+    
+    # Mock end user update
+    mock_updated_user = MagicMock()
+    mock_prisma_client.db.litellm_endusertable.update = AsyncMock(
+        return_value=mock_updated_user
+    )
+    
+    # Create update request with both budget_id and budget creation fields
+    update_request = UpdateCustomerRequest(
+        user_id="test-user",
+        budget_id="existing-budget-link",  # For linking to existing budget
+        max_budget=300.0,  # This should trigger new budget creation
+        rpm_limit=500  # Use valid budget field
+    )
+    
+    # Act
+    await update_end_user(update_request, mock_user_api_key_dict)
+    
+    # Assert
+    # Verify budget creation occurred (because max_budget was provided)
+    mock_prisma_client.db.litellm_budgettable.create.assert_called_once()
+    
+    # Verify end user update was called
+    mock_prisma_client.db.litellm_endusertable.update.assert_called_once()
+    call_args = mock_prisma_client.db.litellm_endusertable.update.call_args
+    
+    # The update data should contain budget_id from the created budget, not the original budget_id
+    update_data = call_args[1]['data']
+    assert update_data['budget_id'] == "new-budget-combo"  # From created budget
\ No newline at end of file