How to Budget for Rising Energy Bills

Home Care
June 29, 2023

Today, budgeting for energy bills isn’t just a wise choice, it’s almost essential to remain financially stable, especially with inflation impacting energy prices in general, so finding new ways to control your monthly utility expenses has never been more vital. This guide breaks down some useful tips to help bring down energy costs as well as ways to make your home more efficient than before to stay two steps ahead of those rising rates.

Why Energy Bills Are Skyrocketing

The rise in energy costs comes down to several recent factors: worldwide inflation, a boom in AI-driven data centers along with electric vehicles, poor/aging infrastructure, and extreme weather have all driven up prices exponentially. In fact, national electricity prices hit a 2.44% increase in 2024, about 22.55% higher than five years before.

With nationwide electricity prices continually surging, the effect on American households is palpable, which is why taking a closer look at your energy consumption may help to minimize stress and open your eyes to how a good financial plan can deal with unpredictable rate hikes.

Budgeting for High Energy Prices

Creating a well-defined budgeting strategy can empower you to take control of your energy expenses and reduce your energy bills. Consider the following tips to help you manage your budget more effectively:

Track Your Energy Usage

Step one? Know what (and why) you’re consuming the energy that you do. Take a critical look at your previous energy bills over the past 12 months, try to pinpoint seasonal-type trends and periods of heavy usage. Use smart home energy monitors (like Sense) for accurate readings in real-time to gauge where you might be able to start cutting down and saving.

Set Realistic Goals for Saving Energy

Saving on energy is a marathon, not some mad dash, so start out small, then scale up. Turn down your thermostat 1 – 2 degrees in winter and consider using LED lighting while also turning off electronics, etc., when not being used. Small changes like these can yield noticeable savings in the long run.

Switch Out Appliances to Be Energy-Efficient

New appliances might be an investment initially, but the payoff could be well worth it. Use ENERGY STAR-certified appliances and try out smart thermostats like Ecobee to start automating your savings. These upgrades may potentially decrease energy bills up to 30% according to the Department of Energy, so it may be worth looking into.

Create an Energy-Specific Budget

Rather than lumping your utilities into one category, make a dedicated budget instead to track gas or electricity separately. Examine patterns over a 12 month period, like heating costs from December to January, compared to summer months. In a nutshell, allocate specific amounts for each month based on prior usage and just budget accordingly.

Embracing a Sustainable Lifestyle to Reduce Energy Bills

“Going green” not only helps out the planet, but it can help out your bank account, too. Here are several ideas to help you get started:

Educate Yourself on Energy Conservation

Stay informed about energy-saving practices and technologies. Educate yourself and your family on the importance of conservation and how it relates to reducing your energy bills.

Join Local & Online Energy Communities

Check out community-based energy initiatives that offer helpful resources and free support. Neighborhood Facebook groups can be a great place to start, as well as just getting with friends and colleagues to start local events or workshops to raise awareness and encourage energy-efficient habits.

Government Incentives

The Inflation Reduction Act introduced a number of federal incentives aimed at promoting energy efficiency. These initiatives may offer financial assistance or tax credits for individuals investing in energy-saving upgrades, further reducing their energy bills.

Compare Energy Companies to Save Big

If you happen to live in one of the 18 U.S. states such as California or Texas where energy deregulation enables you to shop/compare utility providers, then you may want to take advantage of it to potentially lock in the best available rate. Even if you’re unable to switch providers, it’s worth investigating to see if your current plan accurately reflects how you use energy. Plus, some companies may offer time-of-use pricing that rewards you for using energy during off-peak hours.

You Control Your Budget, Not Rising Energy Bills

Rising energy bills can pose a significant financial challenge for many households, but even though you may not be able to control the weather, you can at least outsmart your thermostat. By implementing a budgeting strategy, embracing energy-saving practices, and adopting a sustainable lifestyle, you can effectively manage your energy expenses and reduce your energy bills.

Remember, every small step you take towards conservation can make a big difference not only in your wallet, but also in building a greener and more sustainable future.