The Cost of Utilities – and How to Pay Less

By Jeff Seehorsch

As you shop for a home, you probably know there will be monthly costs for things like water and electricity after you become a homeowner. Sometimes, though, it’s easy to overlook how those expenses can add up. In this guide, we’ll look at average utility costs so you can be aware of what to expect and budget accordingly. We’ll also share some easy tips to keep your monthly bills in check.

What Are Utilities?

The main utilities you’ll have to pay for as a homeowner are natural gas, water and electricity. Cable and internet services are being referred to as utilities more often as well.

Factors That Impact Utility Bills

Most utility costs vary due to a wide range of circumstances. The amount you pay often depends on your surroundings, the type of home and appliances you choose, and simply how much you use your utilities each month.

Location

Your home’s location has a huge effect on how much you’ll pay for each utility. For example, the climate will impact your heating and cooling bills, while local infrastructure can affect things like internet and cable services. As you inquire about a home, be sure to ask about the average cost and availability of basic utilities based on where the home is situated.

Energy Efficiency

Some homes are more efficient than others. Drafty windows and uninsulated attic space can squander heat or cool air, which forces a furnace or AC unit to keep running. Older HVAC units can also cause payments to go up compared to the energy efficient models you can buy today. To ensure a home is energy efficient, evaluate the appliances – including the washer, dryer, refrigerator and dishwasher. Check each one for an Energy Star rating, which typically equals 10 to 20 percent more energy efficiency than non-rated models.

Home Size and Layout

The larger the home, the more it costs to heat or cool. This is especially true with homes that have open floor plans. Homes that feature more rooms or contained spaces do a better job of trapping heat or cool air. This also allows you to close the vents in unused rooms, directing more heat or cool air to where it’s needed most.

Lifestyle

It’s wise to research a home’s energy efficiency and average utility costs, but ultimately your daily habits determine if you pay more or less than the average amount. Want a lush green lawn in a hot climate? Your water bills are likely to be higher than most. Do you wear extra layers to stay warm during cold seasons? You can probably keep your temperature below the norm to save on natural gas or electricity. At the end of the day, how much you lean on utilities in your day-to-day life typically has the biggest effect on how much you pay for them.

Natural Gas

Natural gas is mostly used for heating up your home and the water you use. If you live in an area that’s warm year-round, your gas bill can be less than ten bucks a month.

Average Cost Per Month:

Approximately $11 per thousand square feet

(Energy Information Administration: https://www.eia.gov/naturalgas/monthly/pdf/table_03.pdf)

How to Save on Costs

  • Upgrade your furnace. If you have an older furnace (say 15 years or more in age), replace it with an Energy Star unit that should be about 15 percent more efficient.
  • Stay below 70 degrees. If the temperature turns cold in your area, try to keep your thermostat below 70 degrees. Every degree you lower your temperature can save 5 percent on costs.
  • Adjust your water heater. The Department of Energy recommends a setting of 120 degrees. Since most tank-based water heaters come with a default setting of 140 degrees, see if you can drop your temperature to save on monthly payments.

Electricity

The amount of power a household consumes depends on how many appliances there are, how efficient they are, and the length of time they are in use. In most cases, the key to keeping your electric bill down is to ensure devices aren’t drawing power when they aren’t in use.

Average Cost Per Use:

$0.12 per kWh

Check out the Department of Energy’s Appliance Energy Calculator to get an idea of what your yearly cost might be.

How to Save on Costs

  • Unplug devices. Many electronic devices use power even after being turned off. These include TVs, computers, kitchen appliances and even phone chargers. Avoid wasting electricity by unplugging devices before you head off to work or turn in at night. Or, instead of plugging devices directly into wall outlets, use power strips that can easily be switched off.
  • Stay cool for less. AC units can be power hogs, so it pays to use them as efficiently as possible. A programmable thermostat can save you thousands over the long run, because it will cool your home gradually while you’re away rather than launch into overdrive when you return. Also, be sure to clean your filters once a month so your unit isn’t working harder than it needs to.
  • Go non-electric. Take advantage of all the little ways you can save on power by using “old-fashioned” methods. For example, use natural light instead of lamps whenever possible. Hang your laundry instead of using the dryer. Keep the blinds closed during hot days to keep the sun out, and when it’s cold, open them to let the warmth in.

Water

The average American uses around 88 gallons of water per day. It might sound like a lot, but think about all the ways we use water: washing clothes, taking showers, flushing toilets, running faucets, and the biggest usage of all – maintaining lawns, trees, shrubs, etc. We need a substantial amount of water in many of our daily activities, but we can always find ways to conserve and keep costs down.

Average Cost Per Month:

$15-$77 per month

(Circle of Blue survey: https://www.circleofblue.org/2016/water-management/pricing/infographic-average-u-s-household-water-use-bills-2015-16/)

How to Save on Costs

  • Use less water to wash. Filling a bathtub can take upwards of 50 gallons of water, so showers are typically much more efficient than baths. Pick up a low-flow showerhead and you can cut your water usage by half. Also, avoid running the faucet while brushing your teeth or shaving. Just fill up a cup of water to rinse or clean your razor.
  • Don’t let water go to waste. Speaking of showers, consider bringing a bucket with you! You can use the water you catch for cleaning or watering your sustainable yard. You can also put a bucket or two outside to collect rainwater for the same purpose.
  • Maximize the water you use. Be sure to always fill up your dishwasher or washing machine before running a cycle. When you wash your clothes, avoid the permanent press cycle when you can as it uses up an extra five gallons of water. One more tip – add an aerator to all your faucets. Not only will it reduce the amount of water wasted, it will increase the pressure and improve your faucet’s performance.

Internet and Cable

Internet costs can be a hefty expense. If you want internet and cable service, the cost can climb above $200 a month. Sometimes your options are limited because only one or two service providers are available. Assuming you do have some options, here’s how you can save on costs.

Average Cost Per Month:

Internet: $50 during promotional period / $60 after promotion expiration

(HighSpeedInternet.com: https://www.highspeedinternet.com/resources/how-much-should-i-be-paying-for-high-speed-internet-resource)

Cable: $107

(Fortune, per Leichtman Research Group: http://fortune.com/2018/11/15/average-cable-tv-bill-cord-cutting/)

How to Save on Costs

  • Shop around and bundle up. If you have a choice of providers, write down your must-haves and compare offers. For example, maybe you only want basic cable channels but need blazing-fast internet. There are many cable/internet bundle packages that can be customized to your needs and spare you unnecessary costs.
  • Keep an eye out for sneaky fees. As most internet/cable customers know, monthly bills tend to gradually creep up over time. The upticks are usually small, but they add up fast. As soon as you notice your payment go up, call your provider to go through the list of fees on your bill and see what you’re comfortable with removing.
  • Negotiate – and don’t be afraid to bail. Most internet and cable providers will play ball to keep you as a customer. Watch for special promotions by competing providers, and if you see an offer that costs you far less than what you’re paying, call your current provider to ask for a similar deal. As long as you have other options, you have leverage to lower your bill. If your current provider doesn’t budge, it might be worth it to make a switch.

Keep Utilities Top of Mind, Keep Money in Your Pocket

Most utilities aren’t outrageously expensive on a per-use basis. Taking a hot shower or running the AC on a warm night might only cost a few cents, but over weeks, months and years, those tiny costs add up to thousands of dollars. In many cases, people end up spending thousands more than they need to. The good news is that it doesn’t take much effort to reduce utility costs. Take some simple steps to develop cost-saving habits now, and you’ll have a lot more money to work with later.

 

Download our Checklist of Utility Cost Saving Tips