Lately, utility costs have been relatively stable, compared to the last several years when inflation was running amok. According to the most recent numbers from the Consumer Price Index, energy costs have gone down in the last year for fuel oil (20.8% lower) and gas (12.2% lower,) although electricity prices have gone up 4%.
But even when prices are falling, how much you spend on utilities each month is worth paying attention to. From a budgeting standpoint, it’s a good idea to try and estimate how much utilities cost per month, including how much you’ll pay for services like electricity, water and internet.
Here’s How Much to Plan on Spending
According to Move.org, a moving resource site, anyone budgeting for utilities should plan on spending at least $290.79 a month for essential utility costs such as cable, electricity and natural gas.
The organization found that the average cost per month is $136.84 for electricity, $69.38 for natural gas, $47 for water, $62.50 for garbage and recycling, $77 for broadband internet and $59 for streaming services. In total, that comes to $451.72.
If these numbers seem particularly high or low to you, remember that they are averages. The state you live in and whether you’re in a house or an apartment have a lot to do with how much you’ll pay for utilities.
Surging fuel prices can also send utility bills much higher. If you have more trash cans than most families, that might drive up your garbage removal costs.
Take a look at different kinds of utilities and get more information on how to budget for them.
Electricity
Of all your utilities, you’ll likely spend the most on electricity each month. This bill will fluctuate based on energy prices, the season and your usage. One strategy to take the surprise out of electric bills is to use equal billing, also called budget billing, balance billing or level pay.
This option some utility companies offer allows you to pay the same amount for electricity each month, and at the end of the year you may pay extra. You also may have money credited to your January bill, depending on your estimated and actual usage. Your utility company calculates the monthly amount by dividing the total you spent on electric bills in the past year by 12.
[Read: How to Set Up Your Utilities.]
Heating and Air Conditioning
The high cost of natural gas has finally been going down, but you’ll still want to keep an eye on your utility budget; energy costs aren’t cheap, and the winter is young. Of course, how the seasons unfold really tells the story of how energy prices may go.
If it’s a brutal winter in your area, you may spend a small fortune. If it’s a mild winter, that could be good for your pocketbook. In any case, electricity prices climbed 1.2% from September to October 2024, with costs 4% higher than a year before. Household fuel oil dropped 4.6% and, as noted earlier, were 20.8% lower than a year before.
Internet and Cable
Faster internet will add more to your bill. According to Move.org, a slow dial-up connection can go for as little as $10 a month, but the fastest fiber optic connections may run you as high as $150 every month.
According to Allconnect, a website that enables users to compare TV and internet providers, the average cost of a monthly cable and internet bill is $122 a month. For internet only, the median cost is $81 a month. And streaming services can quickly add up, too. Fortunately, cable and internet pricing hasn’t risen too much in the last three years; that figure is just 5%.
You might be able to reduce costs by choosing a slower internet speed, eliminating some streaming services or getting rid of cable. It can be frustrating to figure out which expenses to get rid of, but there are probably some adjustments you can make, even if it’s asking your cable provider for a cheaper deal.
Ask the Right Questions
While you may have a rough estimate of how much your utilities will cost each month, there’s a simple way to take the guesswork out of calculating them. To get a sense of the average utilities bill for a house, apartment or condo, ask the right questions — and the right people — about average utility costs. For guidance, turn to the following people and service providers:
— Your real estate agent: If you’re moving to a new home and speaking with the previous homeowner isn’t feasible, ask your real estate agent. “Your agent can often request a history of utility costs from the seller’s broker, but when that is not available your agent should be able to see the annual utility costs for similar homes and give you a reasonable range,” says Ben Creamer, co-founder and managing broker of Downtown Realty Company in Chicago.
— Your utility provider: Your electric company should be able to furnish an estimate for a home or apartment you plan on moving into. They’ll either know what the previous owner or tenant paid, or they’ll be able to look at similar buildings.
— Your landlord or apartment manager: If you’re moving into an apartment or a community of condominiums or townhouses, the landlord or building manager will be able to give you an educated guess on what you’re going to pay for utilities.
[READ: Should You Downsize to Save Money?]
Another Way to Estimate Utility Costs
Kari Lorz is a Portland, Oregon-based certified financial education instructor and founder of the website Money for the Mamas. If you feel like you never quite have enough money for utility bills, Lorz suggests essentially creating your own budgeting billing plan for all of your utility bills. So, you would add up each of your utility bills from the past 12 months.
“Water, electricity, natural gas, garbage, sewer and so on. Then divide by 12 months,” Lorz says. “That’s how much you could be setting aside each month in a sinking fund for utilities.”
Lorz suggests creating this sinking fund in a separate checking account, and you could also set up autopay. As long as you’re monitoring the account carefully and shoveling the money you need to into that account, you’d likely always have enough, or close to enough, to pay your utility bills.
[READ: 10 Ways to Save Energy and Lower Utility Bills]
Account for Other Variables
Other factors to keep in mind when estimating your utility costs include:
— Location: Utilities will be far pricier in places with a high cost of living. According to November 2023 data from the U.S. Energy Information Administration, the national average residential price of electricity in 2023 was 12.68 cents per kilowatt. North Dakota and Wyoming had the cheapest electricity costs. Hawaii, California and a handful of states in the northeast have the most expensive fees.
— Age of your home: Older houses can raise your utility costs. They are less likely to be as well-insulated and may be draftier, which could translate to a higher heating bill than average. It’s also worth paying attention to plumbing costs; if your pipes are old and you have leaks — even small ones — your water bill may run higher than it should.
— Age of appliances: Old appliances can also increase utility bills, says Christopher Totaro, director of sales at Coldwell Banker Warburg in New York City.
Totaro advises buying Energy Star appliances. “Each appliance comes with an annual cost of use estimation,” he says. He also suggests switching to LED light bulbs, purchasing your energy through a third-party provider and installing a programmable thermostat or a smart thermostat.
“These simple fixes may help you save 10% or more a year on your utility costs,” Totaro says.
It Also Matters When You Buy From an Electricity Supplier
In most states, you have no choice on who you purchase your electricity from, but 13 states and the District of Columbia give residents a choice in who supplies the electricity (in a handful of those 13 states, local laws may take precedent).
Vernon Trollinger is the web content editor for Energy Ratings LLC, which operates TexasElectricityRatings, a comparison utility website for the Lone Star State. Trollinger is based out of Iowa City, Iowa, which doesn’t yet deregulate electricity.
If you live in a deregulated state, Trollinger suggests that the dead of winter and broiling summer are not the ideal times to be looking for a new electric supplier.
“The absolutely best time to shop for fixed rate plans is when demand is lowest during the spring and fall,” he says, because “energy markets go through cycles.”
So, if everybody’s cranking up the air conditioner or has the heat on 24/7, and you purchase a plan with an electricity provider then, you’ll probably end up paying more.
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How to Estimate Utility Costs originally appeared on usnews.com
Update 12/27/24: This story was published at an earlier date and has been updated with new information.
