The ever-growing demand for electricity in the residential sector results in creating a severe burden on electric grids. However, with the emergence of smart homes (SHs) and smart grids (SGs), this burden can be reduced to some extent. To address this issue, we propose an energy management system in this paper which manages the power requirements of SHs automatically according to the utility constraints and user priorities. The proposed system is based on a heuristic technique which considers the users priority and power available from the grid as well as distributed energy resources (DERs) for scheduling of appliances. It works by dividing the appliance scheduling problem in an SH into sub-problems for different time-slots. Results show that the proposed scheme efficiently manages the load demand of the SH with respect to power available from the utility, battery energy storage system, and user preferences.