A household budget can be a tricky thing to make and an even trickier thing to stick to. But if you have a limited income, large monthly expenses or just a desire to save as much money as possible, a budget is a helpful way to make sure you’re meeting your financial goals each month.
There’s just one big problem: your fluctuating energy bills.
Many of your monthly utility costs are consistent month-to-month and easier to plan for, such as your internet, phone, garbage, cable and insurance costs. Energy bills can fluctuate each month based on your usage and the type of plan you choose. You can’t just grind your energy use to a halt when you reach a certain limit, and during months where it’s particularly hot or cold outside, it can be difficult to keep usage down. Planning utility costs in a monthly budget is a matter of researching your expected costs, calculating averages and planning for overages.
Look at Previous Months’ Bills
If you’ve been living in your home or apartment for a while and you’re budgeting for the first time, your best source of information is your utility bill history. If you saved your bills, that’s great — and if you didn’t, you may be able to access your archived bills online or request copies from your utility companies.
Build a spreadsheet going back at least a year (if possible) with your monthly totals for each commodity. Depending on the climate where you live, you may find that gas and electricity cost twice as much in some months as they do in others. Fortunately, in homes with gas furnaces, the high gas bills usually arrive in winter and the high electric bills arrive in summer, which smooths out the costs a bit. There are many other reasons why your bill can be unusually high, and we’ve put together a checklist for you to help troubleshoot a high energy bill.
Add up your combined utility costs for each month, then add all your monthly costs together and divide that figure by the number of months you tracked. This will give you your average monthly utility bill. If you make this amount your utility budget, you will undoubtedly be under budget some months and over budget in others. But if you have the discipline to save the surplus from your under-budget months so you can spend it on your over-budget months, you should come close to breaking even at the end of the year.
Budgeting Utility Costs in a New Home
If you’re moving to a new home or apartment, budgeting for utility bills may be difficult at first. The size of the space, the condition of the HVAC equipment and appliances, the quality of the insulation — these are just a few of the factors likely to make your utility bills very different. If you’re switching utility companies with your move, you may find that the rates are significantly different, too.
The best way to budget in these circumstances is to try to obtain monthly utility bill costs from the previous tenant or homeowner. Their energy habits won’t be exactly the same as yours, but this will give you a decent ballpark. If you’re renting, you could also ask the landlord or rental company if they have utility estimates.
If you can’t get this information, you may need to rack up a few months’ worth of utility bills before you can effectively budget. But in the meantime, you can also check your bill for your local TDSP and ask them if they offer additional resources to help with monthly budgeting, or you can look for recent information on utility costs in your state by searching the U.S. Energy Information Administration’s website. If you’re living in an apartment, we’ve put together general electricity bill averages that you can also you to help gauge your future costs and budget appropriately.
Save Money with the Electricity Right Plan
Many retail energy providers (REPs) have special plans and programs that are designed to help budgeters. At First Choice Power, we offer prepaid electricity plans that allow you to deposit whatever amount you choose, whenever you want. We’ll send you alerts when your balance is running low, along with estimates of how many more days your current balance will last. In addition, we have many resources for you to reduce your electricity usage and costs throughout the year!