Man looking at stacks of bills.

Of all the bills we pay, some of the most important are also the most basic: our utility bills. Electricity, gas, and oil are needed to light and heat our homes, to cook, and to heat our water. Unfortunately, it is not always easy to predict how much our utility bills will be. They often fluctuate with the seasons.

Why Do We Need a Utility Bill Budget Plan?

With many Americans still living paycheck-to-paycheck, getting surpised by a utility bill that's twice as much as it was the month before can be almost impossible to plan for. For example, electric bills usually rise in the summertime from things like air conditioning and swimming pool filter motors. When it gets cold you need to take steps to winterize your home. Our gas and oil bills will go up because we have to heat our homes, and preparing before the cold weather can cut down on costs. However, these are still expenses that we need to be prepared for. Suffice it to say, many of us find it extremely difficult to budget for expenses that fluctuate as much as these types of bills, and these differences can be quite substantial depending on where you live. A single family home in New England, for example, may see differences of hundreds of dollars per month on their heating expenses when comparing summer and winter bills. Fortunately, most public utilities understand this, and have created different budget plans to assist consumers.

Predictability in Your Utility Bills

These plans can vary from company to company, but they have one common feature: a predictable monthly bill that is easier to budget for. The way the payments are calculated can differ, but in general your monthly bill will be based on your average usage. For example, if you have used $1200 worth of gas over the past year, the company may simply charge you $100 per month ($1200 / 12 months in a year = $100). Utility bill budget plans work in a similar fashion with electric bills and other utilities. Enrolling in a budget plan is usually as simple as placing a phone call to your local utility providers. You may even be able to enroll through the company's website.

What to Consider When Enrolling into a Utility Bill Budget Plan?

There are things you should consider before jumping into a utility bill budget plan:

  • Will you owe them money if your bills are more than what you budgeted for, or will the utility company reimburse you if your actual bills are less?
  • Administration fees - Many companies will charge a fee for having a monthly budget plan. Pay attention to how much this service costs so you don't have surprise expenses.
  • Are you planning to move within the next year? Contracts are for, at least, a year and you may end up owing money if you have to move. If you are planning to move, but still want to use this budget plan, set aside money to cover the cost of the difference when you do relocate.
  • Is it possible to do this on your own? Take the amount that the utility companies are suggesting you pay monthly and budget for that. If there is any extra, simply carry it over into the next month or into your savings account!

Note: If you are suffering a severe financial hardship and having problems keeping your utilities turned on, seek assistance from your local town, city, county, or state. You may have to qualify, but help is available. For a complete explanation of your rights as a utility customer, contact your state's Public Utility Commission.

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