An important but often-overlooked factor to consider – whether you’re planning to buy a house or rent an apartment – is how much money you’re going to spend each month on utilities.

From a budgeting standpoint, neglecting to factor in your average utility bill into your monthly spending can be an expensive mistake. That’s why it’s important to estimate how much you’ll be paying for water, electricity and the internet, among other costs, when searching for a new place.

So, if you’re trying to calculate what your utilities will cost you, take these considerations into account.

  • Create a realistic budget for cable, electricity and air conditioning.
  • Ask the right questions to predict your average utility bill.
  • Account for other variables.

Read on for more information on each strategy.

Create a Realistic Budget for Cable, Electricity and Air Conditioning

While it can be hard to pinpoint precisely how much your electric and water bill will cost you each month, credit counseling agencies suggest planning to pay anywhere from 5% to 10% of your annual income for all of your utilities.

According to the moving company, those renting an apartment should budget $100 to $150 per month (at a minimum) for utility costs such as cable, electricity and natural gas. Homeowners should budget closer to $400, according to found that the average utility cost per month is $110.76 for electricity, $72.10 for natural gas, $70 for water, $14 for garbage and recycling, $85 for cable and $60 for internet.

And if these averages seem particularly high or low to you, remember that this is an average – and that what state you live in has a lot to do with how much you’re going to pay.

Electricity. You’re likely to spend the most monthly on your electric bill. Of course, this bill will fluctuate, depending on the season and if you have your air conditioning on blast. Some utilities offer even billing, which allows you to pay the same amount each month, and at the end of the year, pay extra or have money credited for your January bill.

Air conditioning and heating. Keep in mind that if you run your air conditioning often, your electric bill is likely to spike, especially during the warmer months. Heating costs can also inflate your electric bill. So, if you use natural gas to heat your home, be prepared for your natural gas bill to go up in winter.

Internet and cable. You might reduce your internet costs if you request a slower internet speed. After all, if you don’t stream a lot of movies and play a lot of video games, a slower connection may not bother you. On the other hand, if you’re on a tight budget and you’ve opted for fast-speed internet access, you might want to consider dropping your cable subscription and streaming TV to optimize savings.

Or ditch that advice altogether, keep your fast-speed internet and cable, which are hard to imagine giving up these days, and find somewhere else in your budget to cut.

The bottom line, though: Everybody needs to account for utility fees in their monthly budget.

Ask the Right Questions to Predict Your Average Utility Bill

While you may only have a rough estimate of how much utilities will cost you each month until you move in, there’s a simple way to take the guesswork out of calculating such fees. To get a sense of the average utilities cost of a house, apartment or condo, ask the right questions – and the right people – about average utility bill costs. For guidance, turn to the following people and service providers:

  • Your real estate agent: If talking to the previous homeowner isn’t feasible, talk to your real estate agent. “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.
  • The utility provider: “Internet and cable can be calculated with a quick call to your local cable provider,” says Ericka Rios, co-founder and director of leasing of Downtown Apartment Company, based in Chicago. If you’re dealing with an apartment complex, Rios suggests contacting the electric company. It can furnish cost data for similar homes and apartments.
  • Your future landlord or apartment manager: “Most new apartment communities recognize that this is a concern for new residents and have established utility packages with prices that vary based on unit size,” Rios says. With many apartment communities, she says, “the major utility expenses – heating, air conditioning, gas, water, trash removal – are covered in a single monthly fee, eliminating much of the budget guesswork. The only variables are electricity, internet and cable.”

Account for Other Variables

Remember: Utilities are going to be far pricier in cities with a high cost of living. According to 2019 data from the U.S. Energy Information Administration, Louisiana has the cheapest electricity costs, with residents paying 7.71 cents per kilowatt, while Hawaii has the most expensive fees, with residents paying 29.18 cents per kilowatt. The U.S. Energy Information Administration found that the national average utility cost is 10.48 cents per kilowatt.

Older houses can raise your utility costs as well. They are less likely to be as well insulated and may be draftier, which could translate to a high heating bill. It’s also worth paying attention to plumbing costs – because if your pipes are old and you have leaks, even small ones, that can mean your water bill is higher than it needs to be.

If you have old appliances, too, that could raise your utility bills, says Christopher Totaro, a real estate agent with Warburg Realty in New York City.

Totaro suggests 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 like the Nest system.

“These simple fixes may help you save 10% or more a year on your utility costs,” Totaro says.

And if you do that – budget for your utilities and manage to spend less on them than you otherwise would have – you’ll have more money left over for everything else.


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