To balance the budget for the year, total revenues must equal total expenditures
Which of these is required to balance the budget of the year?
Revenues must be equal to expenditures or spending
Think of it like your checking account. Money comes in (revenues), money goes out (expenditures). When those two numbers match by year-end, you’ve balanced the budget. Miss the mark, and you’re left scrambling—either by cutting expenses or borrowing (which piles up debt). Back in 2023, the U.S. federal budget showed exactly what happens when spending outpaces revenue: a $1.7 trillion deficitCBO.
How do you balance a budget?
Review financial reports, compare actuals to prior year, forecast income and expenses, and adjust spending or revenue as needed
- Start with the numbers: Pull bank statements, credit card bills, and pay stubs. Where’s your money really going?
- Compare to last year: Did you overspend on takeout? Under-earn from freelance gigs?
- Make your best guess: Project income for the next 12 months. Be realistic—don’t assume a 50% raise.
- List every expense: Rent, student loans, groceries, even that forgotten gym membership. Split them into fixed (unchanging) and variable (flexible) costs.
- Estimate revenue: Average your monthly take-home pay or expected earnings. If your income swings wildly, use your lowest-earning month as a baseline.
- Run the math: Subtract projected expenses from estimated revenue. If expenses win, you’ve got two choices—cut spending or find more income.
- Adjust ruthlessly: Shift money from non-essentials (hello, streaming services you forgot about) to cover gaps.
- Track monthly: Lock in your budget, then check in regularly. Life changes—so should your plan.
Which level of government is required to balance their budget?
State governments are generally required to balance their budgets through constitutional or statutory rules
Most states play by strict rules: governors propose balanced budgets, legislatures pass them, and deficits aren’t allowed to roll over. The details vary—some states demand balance at the proposal stage, others only at year-end. California, for example, has its constitution locked tight on thisCalifornia Legislative Analyst's Office. The federal government? No such requirement. It’s why we see trillion-dollar deficits year after year.
What is a balanced budget requirement?
A balanced budget requirement is a constitutional or statutory rule that prohibits spending more than collected revenue
Forty-nine states have some version of this rule to keep deficits in check. The rules aren’t all the same—some demand balance only when the budget is approved, others insist on it all year long. According to Pew Charitable Trusts, states with tighter rules tend to borrow less and run smaller deficits. Colorado and Tennessee, for instance, don’t let deficits carry over—period.
What are the advantages of a balanced budget?
The main advantage is avoiding new debt to pay ongoing expenses
No one likes interest charges. For governments, that means more cash for schools, roads, and emergency services instead of debt payments. Over time, balanced budgets shrink long-term debt and boost credit ratings. Minnesota nailed this in 2025, closing the year with a $1.9 billion surplus—enough to fund infrastructure and education without new borrowingMinnesota Management & Budget.
Which states have a balanced budget?
Alaska, South Dakota, Tennessee, Idaho, and Utah rank among states with strong balanced budget practices
Mercatus Center at George Mason University keeps tabs on this, and these five states consistently hit the mark. Alaska rides high on oil revenues, keeping surpluses steady. South Dakota and Tennessee have constitutional ironclad rules. Idaho and Utah rely on tight legislative oversight. Vermont’s the odd one out—no rule at all, and it’s run deficits before. Enforcement varies, but these states prove it’s doable.
What is the 70 20 10 Rule money?
It’s a spending, saving, and sharing rule where you spend 70%, save 20%, and donate 10% of your income
No spreadsheets needed. If you bring home $4,000 monthly after taxes, that’s $2,800 for living expenses, $800 to savings, and $400 to charity or causes you care about. Tweak the numbers if you’re drowning in debt or racing toward retirement—maybe save 25% instead. The 50-30-20 rule works similarly: 50% for needs, 30% for wants, 20% for savingsConsumer Financial Protection Bureau.
What does a balanced budget look like?
A balanced budget occurs when total revenues are equal to or greater than total expenses for the year
Take Iowa in 2025: $8.7 billion in revenue, $8.6 billion in spending. Close enough to call it balanced—and they even had a tiny surplus left over. A surplus is fine; deficits aren’t. Critics argue deficits dump costs on future taxpayers. Supporters say deficits can juice the economy during downturns. The real goal? Sustainability—revenues and expenses need to line up over time, not just on paper for one yearOffice of the State Comptroller, New York.
Is a balanced budget good?
Balanced budgets can be beneficial but may require steep spending cuts and tax increases that could harm the economy
Economists cringe at sudden, drastic cuts. Remember the 2013 federal sequester? It slashed $85 billion from discretionary spending and shaved 0.6% off GDP growth that yearCBO. Balanced budgets make sense long-term, but timing is everything. Governments must balance fiscal responsibility with keeping the economy humming. Households benefit from balance, but governments face way more moving parts.
Is a balanced budget amendment appropriate?
There is currently no balanced budget requirement in the U.S. Constitution
Several amendments have been floated over the years—some demand balance every year, others over a full business cycle. None have passed, mostly because they could tie the government’s hands during crises. The last serious push fizzled in the ‘80s and ‘90s. As of 2026, the federal budget still runs deficits year after year, averaging 5-7% of GDPWhite House OMB.
Do all states have a balanced budget requirement?
All states except Vermont have some form of balanced budget requirement
Forty-nine states play by the rules. Most require governors to propose balanced budgets and legislatures to pass them. California demands balance not just on paper, but throughout the year. Vermont? No rule. It’s run deficits before. Enforcement varies wildly—some states let you adjust mid-year, others slap you with penalties for overspending. Texas, for example, won’t let deficits carry over into the next two-year budget cycleTexas Comptroller.
Is it possible to balance the federal budget?
Balancing the federal budget is difficult when the economy is weak and unemployment is high
The federal budget runs on tax revenue—and when the economy stumbles, so do those numbers. In 2020, the pandemic crushed tax collections and forced massive spending, pushing the deficit to $3.1 trillion. Even a mild slowdown can blow a hole in the budget. To balance it today, Congress would need to slash spending by 25% or hike taxes by 30%—both political nonstarters. The Congressional Budget Office doesn’t see deficits shrinking anytime soon; they’re projecting $2 trillion annual deficits through 2034 without changes.
Where does the budget process begin?
The budget process begins in the executive branch one year before the budget takes effect
Federal agencies submit their wish lists to the White House Office of Management and Budget (OMB) in spring of the prior year. OMB reviews, trims, and shapes the president’s final proposal, which lands on Congress’s desk in February. Then the real fun starts: hearings, negotiations, and a mad dash to finalize everything by October 1. The FY 2026 budget? It was drafted in 2025 and debated all yearWhite House OMB.
Why we need a balanced budget amendment?
Advocates say it would force Congress to spend more wisely and avoid chronic deficits
Without rules, Congress tends to spend first and ask questions later. A constitutional amendment could cap spending or demand supermajority votes to exceed revenue. Critics argue it could handcuff the government during emergencies or recessions. States with strict rules tend to carry less debt relative to their size. The debate’s been stuck since the ‘80s—no amendment’s made it through yetNational Conference of State Legislatures.
What is budget requirements?
A budget requirement is an itemized summary of expected income and planned expenditures over a set period
At the government level, it’s a detailed plan for collecting revenue (taxes, fees) and doling out funds to agencies and programs. For households, it’s tracking monthly income and mapping out monthly expenses. Budgets can be annual, quarterly, or even weekly. Done right, they keep overspending in check and highlight where you can save. A family pulling in $70,000 annually might budget $40,000 for housing, $12,000 for groceries, and $8,000 for transportation—leaving room for savings and emergenciesConsumer Financial Protection Bureau.
