Before proceeding with learning how to balance a budget it is important to understand what a Balanced Budget is. Both companies and the government require the best practice of balancing a budget.
A balanced budget is a situation in which the financial planning or budgeting process (which make up the total revenue) are either equal to, or greater than the total expenses. This is a situation which is realized at the end of a fiscal year after best practices have been implemented.
The term “Balanced Budget” is often used in reference to official government budgets for best practices. The government usually issues a press release stating its balanced budget for the upcoming year as a best practice. Similarly, politicians campaigning for elections also promise a balanced budget once in office. A balanced budget means a stronger economy which means best practices in governments.
There are lots of best practices involved in planning a budget for the government. However, balancing a budget is not as difficult as it seems. According to congressman Akin the total spending of the government is what needs balancing for best practices in balancing a budget. The components of total spending at a state level include Mandatory Spending and Discretionary Spending.
Mandatory spending means entitlements of people in a state or country. This involves best practices of spending on requirements like; farm commodity prices and income support programs. Other mandatory spending programs for best practices include, crop insurance, food stamps and child nutrition programs.
Discretionary spending, on the other hand, means expenses of the government through an appropriations act. Compliance with this act is an important best practice. However, this spending is optional and is an annual spending according to decisions made by the congress.
Similarly there is non-discretionary spending which are also best practices. They include spending or expenses incurred by certain programs which are required by existing laws of the country e.g. entitlements. Entitlements are programs like social security, Medicare or Medicaid and such services. Similarly, net interests on debts which come from loans people take from the government are also part of non discretionary spending. Other non discretionary expenses or debts which the government provides for its citizens as a best practice are also important.
To balance the budget for best practices, the government will need to cut discretionary and non discretionary expensed. This means ensuring that the federal expenses to zero. This means stopping all expenses on military, solders and defenses. In other words, cutting out all federal expenses will result in a government balanced budget.
In recent times, there is a lot of recession and this is why there is need to know how to balance a budget to ensure best practices.