The party must be responsible as it cannot foresee what the economy would be like at the next election, he added.
Ahead of his party conference speech, he said it was a "big task" to restore Labour's credibility on the economy.
And he said he was "deeply, deeply sorry" over failures in bank regulation during the party's years in power.
In Monday's speech, Mr Balls will pledge to spend any windfall from the sale of bank shares on paying off the national debt.
He will announce a "five-point plan" for boosting jobs and growth, while also vowing to bind Labour governments to strict spending rules.
But the Conservatives said Mr Balls had taken Labour "further away from economic credibility".
Labour has accused the government of cutting spending too fast and causing the economy to stall.
But while Mr Balls is urging the government to change course, saying Britain is "crying out for a better way", he said Labour would not be making any "irresponsible promises" of his own.
"I think people have to believe what we say and that means we have to be very careful about what we say," he told Radio 4's Today programme.
"We can't come along and just say now we will promise to reverse every tax rise or spending cut, however unpopular or however dangerous for the economy, because we don't know what the state of the economy will be in five years' time."
Mr Balls acknowledged the last Labour government had made mistakes over the economy, saying he was "deeply, deeply sorry" for not introducing tougher regulation on the banks.
"The banking crisis was a disaster... If we had acted earlier on bank regulation, we could have avoided that economic crisis."
Public trust
He accepted it would take time for the party to earn the public's trust on the economy again.
"History shows it is hard... It took Labour 18 years after 1979 to restore credibility. We have not got 18 years. We have to do this in this parliament.
"Opposition is about answering the big question but I cannot answer that question unless people are trusting in our credibility and ability to make tough decisions."
Mr Balls said David Cameron and George Osborne had "the wrong prescription" for the current economic crisis, which he said was the "most serious in his lifetime".
In his speech, Mr Balls will say Britain's economy faces a "global growth crisis" that is becoming "more dangerous by the day".
He will argue that having a plan to boost growth "will help get the economy moving again and stop the vicious circle on the deficit - but by itself it won't secure our economic future or magic the deficit away" and tough decisions will still be needed on tax and spending.
With the party in the middle of a two-year policy review, manifesto commitments are likely to be thin on the ground in Liverpool.
Share pledges
But Mr Balls will make two new pledges in his speech.
He will say: "First, before the next election - and based on the circumstances we face - we will set out for our manifesto tough fiscal rules that the next Labour government will have to stick to - to get our country's current budget back to balance and national debt on a downward path. And these fiscal rules will be independently monitored by the Office for Budget Responsibility.
"And second we know that, even as bank shares are falling again, David Cameron and Nick Clegg are still betting on a windfall gain from privatising RBS and Lloyds to pay for a pre-election giveaway.
"We could also pledge to spend that windfall.
"But - just as with the 3G mobile phone auction - we will commit instead in our manifesto to do the responsible thing and use any windfall gain from the sale of bank shares to repay the national debt. That will be Labour's choice - fiscal responsibility in the national interest."
A Conservative spokesman said Mr Balls had "deliberately fiddled" fiscal rules in the past, and the public would not trust his announcement of new restrictions.
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