They show up in my inbox during the first week of the month, usually just a few days apart. When I see them, I pause and whisper, “Please, please, please, let it be low!” over and over again. With my mouse pointer hovering, I close my eyes and open my electric or natural gas bill for the month.
It’s a lot like playing the lottery.
When I open my eyes, I hope the numbers fall in my favor. The lower the number, the easier it is to pay them. But living in the Midwest, we have a saying: “If you don’t like the weather, just wait until tomorrow.” Conditions can change quickly, as can your utility bills. All it takes is one summer heat wave, or one of those polar vortex things to cause the bills to skyrocket.
I’ve finally had enough of playing the utility bill lottery.
The key to being successful with a budget is to properly identify your expenses each month — which is hard to do in the wonderful climate of Minnesota. My natural gas bill shoots up during the winter months as we heat our home, but declines to almost nothing during the summer. My electric bill skyrockets during the air conditioned summer months, but cuts itself in half during the winter months.
By following these four easy steps, however, I’ll finally be ready to handle any utility bill.
1. Collect your history
I signed onto my accounts for both my public utility company (which includes electric and water), as well as my natural gas company to collect the last two years of historical data.
2. Calculate the total monthly utility bill
I entered the amounts for each bill into a spreadsheet by month, then added the values together to calculate each month’s total utility expense. I found that my monthly utility bill for the last two years ranged from $227 to $488; you can see how such a wide range would make utilities hard to budget for.
3. Calculate the average total
Adding all of the monthly amounts together gave me the total I spent on utilities over the last two years. After dividing that total by 24 (the number of months), I discovered that my average utility cost per month was $331.
4. Make an action plan
Now that I know what my average is, I know what to budget each month. If the total of the two bills is less than $331, the extra goes into a newly opened “utility bill slush fund.” That way, if they happen to be more than the average, I’ll know exactly where to get the money.
It’s a perfect time of year to start this process, as my historical data indicates that March, April, and May enjoy some of the lowest utility bills. I now have time to stash money away in my slush fund before the hot summer months roll in — along with higher electric bills.
Do your utility bills vary dramatically with the seasons? How do you account for that in your budget?