Utility Bill: Explaining Each Type and How to Reduce Your Monthly Expenses

When buying or renting a house, condominium, or apartment, utility bills are a part of your cost of living expenses. An average home can spend around $2,200 a year on basic utilities alone. If your household makes the median average household income of $61,372, according to the United States Census Bureau, your household can meet the average utilities expense. But if you live alone or make less than this in a year, your utilities need to be much lower than this if you want to make ends meet.

With that in mind, here are the different types of bills that fall under your utilities expense. We’ll go through what it is, why it’s necessary, and how you can reduce your monthly bill to save a few hundred dollars.


What Is a Utility Bill?

Utilities are services provided to residential and commercial properties that makes a property livable. The services can be provided by the government (which makes it a public utility company) or a private company. Because thousands of properties in your city or even your country need these utilities, the organization running the utility service has large infrastructure to service thousands of its customers. It’s why you see water and electric companies have pipes running all over the city just to serve current customers and be ready for new customers.

Photo from Kelly Sikkema – Unsplash

Your utility bill is the cost of these organizations making sure your daily needs are provided through their services. Some bills, like cable TV or your phone, are fixed regardless of how much or how little you use their service in a month. However, some utility bills are dependent on how much you use the utility provider’s service. While you can’t really do anything about the former to cut down costs except to disconnect entirely, the latter can be controlled to help you reduce your monthly costs.


Types of Utility Bills and How to Cut Costs

Today, there are many types of bills that count as utility bills to some, but an unnecessary non-utility bill for others. These are the services required for all properties, regardless of whether it is for a residential or commercial property.

Photo from Kelly Sikkema – Unsplash

Take note that the average monthly cost in each of these utilities are for an average household. Commercial or industrial properties and bigger homes will obviously need to pay more, while smaller places like apartments will require less utilities.


Water and Sewage

Average monthly cost: $70

Companies in the water industry provide clean water and sewage treatment services. Most of the water infrastructure in all countries is run by the government or a local government unit, though in small countries (especially in developing countries), it is the responsibility of the national government to ensure citizens get their water. It is possible for water companies to be privatized, but in such cases, the government has to agree to it and has a certain amount of supervision over it to ensure the company is providing water necessary to the people.

This is obviously a necessary utility for your home. From bathing, to drinking, to cooking, and many more daily activities, water is a necessity. It is much more practical to set up an account with your local water utility provider than to constantly buy bottled water for your daily needs. So, how can you avail of water utilities without spending too much in a month?


Ways to Save:

  1. Fix leaky pipes and fixtures. The average household wastes 10,000 gallons of water annually if you consider the amount of water lost to drips and leaks. A household loses at least $150 a year, with some even reaching $500 for those with particularly damaged pipes. This means that if you have a leaky pipe, you could be paying tens of dollars more on your monthly utility bill for water that’s just gone the drain.
  2. Conserve Rain Water. Invest in a water drum or a large water container (they cost less than $75 in some hardware stores) and use that to collect rainwater every time it rains. There are various ways to collect rainwater, but the simplest way would be to open the drum a few minutes after it rains (the first rain that falls is often full of dirt particles), leave it out, and collect rain water. This isn’t for drinking or bathing, but you can save a few dollars a month by using rainwater to water your plants, compost, flush your toilet, and fill up any pond or outdoor water fixture you have.
  1. Adjust Your Toilet Settings. Older toilet models use around 14 liters (almost 4 gallons) for every flush – on average, that’s 71 liters or about 19 gallons per person every day. Updating to an ultra-low-flow toilet, however, can reduce your water waste to 6 liters (less than 2 gallons) per flush. If replacing your toilet is out of the question, manually adjusting your toilet settings can help you reduce the amount of water used in every flush.



Average monthly cost: $104

A lot of tech requires electricity, and most handheld devices still require electric charging every now and then. Electric companies’ utility bills consist of the cost of generating electricity into your home and having it connected to reach your home, so your electric bill is usually the highest among all the other utility bills.

Ways to Save:

  1. Unplugged unused devices. While some appliances won’t use up electricity when it’s plugged, devices like your chargers, cable boxes, router, and other more modern devices are using up electricity when plugged though not in use. These appliances are built in such a way that it is constantly draining and using power, which means an added cost to your electricity bill. While some devices are out of the question, for smaller devices, learn to unplug your device when not in use.
  2. Insulate Your Home. Heating or cooling your home may sometimes cost money. However, it is much easier for your thermostat to control your home’s indoor temperature if it is insulated and there aren’t any leaks where the heat or cold can escape. If it’s a hot day and you want to make your home colder, your thermostat takes up more electricity trying to bring down the temperature to a certain level and then keeping it that way when the cold keeps escaping.
  3. Update your appliances. Your electricity bill may be unnecessarily high because your appliances are older models that aren’t environmentally friendly. Newer appliance models can reduce the amount of electricity used, thus saving you money.


Natural Gas/Heating

Average monthly cost: $83

Natural gas is used for cooking and heating water and the home temperature. While some houses have electric heaters in their homes, most houses have a connection to one of the many natural gas providers in the US. Up to $20 worth of gas is used for cooking, while the other $63 is used for heating your water and the temperature of your home. Note that the bigger your home is and the more difficult it is to control the indoor temperature, the more likely your bill will increase.

Ways to Save:

  1. Lower your thermostat. You may find that your home’s temperature will be just fine if you lower your thermostat by a few degrees. Also, try to lower your thermostat settings when you leave the house.
  2. Invest in a programmable thermostat. Smart thermostats cost around $100, but they can be an investment when you consider that it can control your home’s temperature while you’re sleeping or when you’re not at home.


What May Not Be a Utility Bill? (And How Can I Cut Costs on It Anyway?)

Generally, utility bills are used to describe expenses necessary to running a household. However, some people would consider their cable, internet, and telephone to be a necessary part of their living expenses. Regardless of whether you consider these to be utility bills, here’s how you can decrease your bill.


Cable TV, Internet & Phone

Average monthly cost: $103 for cable, $40 for internet, $73 per phone

Some providers offer cable, internet, and telephone service altogether. However, if you’re only going for cable or satellite TV, you could be setting yourself back a few hundred dollars alone.

Ways to Save:

  1. Avoid buying pay-per-view. Pay-per-view adds to your bill, but why spend on additional shows when you can watch it online or somewhere else for a lower cost?
  2. Remove your cable. In this age of Netflix, IFlix, and YouTube Red, more and more homeowners are “cord-cutting,” the act of discontinuing their cable and satellite TV account. Because if the average monthly cost of cable is an additional $103 but an account on Netflix and other online streaming services is just a fraction of that. And with less people turning on the TV for entertainment and news, more people are seeing that having cable TV is unnecessary.
  3. Apply for a postpaid plan. This doesn’t apply to everyone (e.g. people who only text a handful of people every month), but if you frequently call and text at work and for personal use, you may find that it’s more practical to buy a postpaid plan that offers plenty of discounts, freebies, and unlimited usage in some of its packages. For example, if you’re likely to text a hundred times in the span of a week, you may find that a plan with unlimited texts can be useful. However, just remember to check your usage first to see if getting a postpaid plan is more practical.


What About Smaller Homes Like Apartments and Rental Homes?

If you’re not buying a home and prefer to rent, you may find that some utilities aren’t necessary in your computation. Some landlords cover all the utilities and a fraction of your rent already goes to shouldering the utilities payments. Some landlords make you pay for everything, while some landlords shoulder everything except water and electricity.

On average, though, a person renting an average-sized apartment may end up spending around $200 a month on water, electricity, and heating costs. This does not include the cost of renting the place, which is at around $1,350 a month. Additional utilities such as cable and internet may set you back around a hundred dollars, but most landlords only provide them as optional. So, when you’re scouting for places to rent, be sure to talk to your landlord about what additional costs there may be.


For people with not a lot of money to spend, keeping the utilities down is a great way to save money. While some utilities are fixed, conserving resources like water and electricity can reduce one’s monthly expenses, giving them more money to spend elsewhere or for their home’s improvement.

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