How to Estimate Utility Costs

An important but often-overlooked factor to consider — whether you’re planning to buy a house or rent an apartment — is how much money you’re going to spend each month on utilities.

From a budgeting standpoint, neglecting to factor in your average utility bill into your monthly spending can be an expensive mistake. That’s why it’s important to estimate how much you’ll be paying for water, electricity and the internet, among other costs, when searching for a new place.

So, if you’re trying to calculate what your utilities will cost you, take these considerations into account.

[See: 10 Ways to Save Energy and Reduce Utility Bills at Home.]

Create a Realistic Budget for Cable, Electricity and Air Conditioning

While it can be hard to pinpoint precisely how much your electric and water bill will cost you each month, credit counseling agencies suggest planning to pay anywhere from 5 to 10 percent of your annual income for all of your utilities.

According to the moving company, those renting an apartment should budget $200 per month (at a minimum) for utility costs such as cable, electricity and natural gas. found that the average utility cost per month for apartment-dwellers is $183 for electricity, $82 for natural gas, $40 for water, $12 to $20 for garbage and recycling, $100 for cable and $74 for internet.

If you want to drill down a little further, you might want to think about your utilities in this way.

Electricity. You’re likely to spend the most monthly on your electric bill. Of course, this bill will fluctuate, depending on the season and if you have your air-conditioning on blast. Some utilities offer even billing, which allows you to pay the same amount each month, and at the end of the year, pay extra or have money credited for your January bill.

Air conditioning and heating. Keep in mind that if you run your air conditioning often, your electric bill is likely to spike, especially during the warmer months. Heating costs can also inflate your electric bill. So, if you use natural gas to heat your home, be prepared for your natural gas bill to go up in winter.

Internet and cable. You might reduce your internet costs if you request a slower internet speed. After all, if you don’t stream a lot of movies and play a lot of video games, a slower connection may not bother you. On the other hand, if you’re on a tight budget and you’ve opted for fast-speed internet access, you might want to consider dropping your cable subscription and streaming TV to optimize savings.

The bottom line: You must account for utility fees in your monthly budget.

[See: 10 Ways to Lower Your Heating Bill.]

Ask the Right Questions to Predict Your Average Utility Bill

While you may only have a rough estimate of how much utilities will cost you each month until you move in, there’s a simple way to take the guesswork out of calculating such fees. To get a sense of the average utilities cost of a house, apartment or condo, ask the right queries — and the right people — about average utility bill costs. For guidance, turn to the following people and service providers:

Your realtor: If talking to the previous homeowner isn’t feasible, talk to your realtor. “Your agent should be able to see the annual utility costs for similar homes that are a year or two older and give you a reasonable range,” says Ben Creamer, co-founder and managing broker of Downtown Realty Company in Chicago.

The utility provider: “Internet and cable can be calculated with a quick call to your local cable provider,” says Ericka Rios, co-founder and director of leasing of Downtown Apartment Company, based in Chicago. If you’re dealing with an apartment complex, Rios suggests contacting the electric company. They can furnish cost data for similar homes and apartments.

Your future landlord or apartment manager: “Most new apartment communities recognize that this is a concern for new residents and have established utility packages with prices that vary based on unit size,” Rios says. With many apartment communities, she says, “the major utility expenses — heating, air conditioning, gas, water, trash removal — are covered in a single monthly fee, eliminating much of the budget guesswork. The only variables are electricity, internet and cable.”

Account for Other Variables

Remember: Utilities are going to be far pricier in cities with a high cost of living. According to 2017 data from the U.S. Energy Information Administration, Louisiana has the cheapest electricity costs, with residents paying 7.75 cents per kilowatt, while Hawaii has the most expensive fees, with residents paying 26.07 cents per kilowatt. The U.S. Energy Information Administration found that the national average utility cost is 10.54 cents per kilowatt.

Older houses can raise your utility costs as well. They are less likely to be as well insulated and may be draftier, which could translate to a high heating bill. It’s also worth paying attention to plumbing costs. “Hundreds of extra dollars are spent on utility bills each year due to aging homes throughout the U.S. The average home is approximately 40 years old and the plumbing infrastructure is usually copper, which only has a life span of about 50 years,” says Gabriel Halimi, co-founder and CEO of Flo Technologies, an LA-based company that sells a smart home water monitoring and shut-off system.

[See: 6 Alternatives to Traditional Air Conditioning to Consider.]

What do old pipes mean for your water bill? Nothing good, Halimi says. “Outdated pipes often lead to leaky sinks, toilets and more, leading homeowners to unknowingly waste around 17 gallons of water per day,” he explains. That’s a waste of water, and a waste of money.

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How to Estimate Utility Costs originally appeared on

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