How to budget for utility costs with an eye on savings

Many of us can recall growing up with parents who reminded us to turn off the lights when we left a room. Perhaps the reminder was followed with, “Money doesn’t grow on trees.” In fact, you may utter those same words as a parent now. 

Or, maybe you had a father who required navy showers to conserve water and electricity since less hot water was needed. 

The goal was saving money on the electric and water bills, two of the utility bills that arrive each month. Like other expenses you have, you need to differentiate between fixed expenses and those that fluctuate in your budgeting.

Your phone is a fixed expense. Unless it’s variable. It depends on how you set it up

Your phone is usually a fixed expense, whether you still have a landline or a mobile phone. More than half of households now use mobile phones instead of landlines. That generally means no long-distance charges, which fluctuate. 

But depending on your plan, you get dinged for data usage charges for going over the allotted amount. Those charges could bust your phone budget. If you’re blowing through the data each month, that’s a sign to reevaluate your data plan and lower the cost. 

For those who still have a landline, you may still be paying charges each month for long distance calls. You’ll need to look at your bills to see the trend and figure out an average. 

If you have both a landline and a mobile phone, you may want to evaluate the cost of maintaining both if saving money and cutting expenses are your goals in creating a budget. Sometimes owners keep the landline for home security systems. But many home security companies have adapted to people ditching the landline and now have wireless systems. 

Watching television can be expensive. Here’s how to cut that cost

Cable tends to be another fixed cost. The monthly cost depends on the plan you choose. It can run to more than $100 per month with all the features and cable boxes you tack onto the plan. Even more if you’ve married that with an internet plan through the cable company. 

But as people have done with landlines, some are cutting the cord. There is a variety of reasons for cutting the cord but saving money is the biggest one. You can watch television without having cable. Then it’s a matter of what you pay for internet and the streaming content services you choose, keeping an eye toward the primary objective of saving money. 

You’re literally throwing money away to have your trashed picked up

Garbage and recycling expenses tend to be a fixed expense as well. Cities charge annually or monthly. It just depends on where you live and how you budget those expenses. With that annual fee, you need to set the budget for the month the bill comes in and ensure you have the money set aside in savings. 

The fees may also depend on the size of container you use. A bigger container means a higher fee. Cost-conscious folks may want to consider how to reduce their garbage output to save money. 

Heating and cooling costs vary the most. Consider setting a budget for the whole year

Electricity, water, and natural gas fluctuate each month. Figuring out how to budget for these expenses takes some analysis. For each, you need to look over past bills for a year or more with a careful for peak months. 

Heating and cooling your home makes up the largest portion of your energy use. For people in hot climates, the summer months likely will be the peak months for electricity because the air conditioning seems to run non-stop. Those in cold climates see their heating bills – gas or electric – rise significantly. 

By looking at the trends, you can fine-tune your monthly budget and make sure you have the funds in place to handle the peak months. 

You also can check with your utility company to see if it does “budget billing.” The company figures out the average for you and then bills a set amount each month. This gives you a fixed expense, evening out the bills during peak months but increases the monthly expense in non-peak months. 

Pay close attention to the terms of the agreement. You may get hit with a bill at the end of the year if you exceeded the average usage determined by the utility. If you’re under the usage, the overpayment may get carried over to the next year. 

Budgeting for savings opportunities all over your house

Whether you choose that path or not, you can take steps to save on your energy bills. Those with gas lines already to the house could explore converting the water heater and dryer to gas. Gas is typically considered cheaper than electric, and you may be eligible for tax credits for making the conversion. 

In addition to this, there are many other ways of reducing your energy expense. It’s a matter of doing the cost-benefit analysis to determine if the investment you make in more efficient appliances plays out over the time you will be in your home. But you could start small by simply turning out the lights when leaving a room.