I Did This 1 Thing to Keep My Utility Costs Manageable, and I'll Never Go Back

When I first moved out on my own, I dreaded getting winter utility bills. As a lifelong Wisconsin resident and someone who is perpetually cold, my bills used to spike when the temperatures dropped and that made it difficult for me to budget effectively.

But then I learned about a total game-changer that I still use to this day. And it could help you out too.

Predictable utility payments are possible

Utility payments are tricky because they vary depending on your usage. If you have a month where you're using more heat or electricity than normal, you're going to see that reflected in your bill -- but not until after you've already spent that money.

For years, I thought this was just something I'd have to deal with, and then I learned about utility budget billing. This is a service many utility providers offer that enables you to get a predictable monthly utility payment all year round.

Utility companies look at your usage over the previous 12 months and divide this by 12 to get an average monthly payment. That's how much they bill you every month of the year, so there are no spikes in the winter. It makes it a lot easier to plan your budget because you'll know exactly how much to earmark for utility costs.

Your utility provider will update your bill about twice per year based on updated rates and usage information. So you will have the occasional bill change, but it probably won't be a massive increase unless your usage has changed significantly in the last year.

That is one pitfall you have to watch for, especially in your first year on a utility budget billing plan. Sometimes, knowing you have a predictable payment coming can cause you to be less careful about how much heat and electricity you're actually using. If your usage rises significantly, you'll probably see a big increase when the utility provider recalculates your bill -- and an impact on your personal finances. But if you're careful to keep your usage to a minimum, this shouldn't be an issue.

How to enroll in a utility budget billing plan

Contact your utility provider to see whether a budget billing plan is an option for you. If it is, inquire about how much you would pay per month and how often the company would reevaluate your rates.

You should also ask about whether there are any administrative fees associated with switching to a budget billing plan. If there are, make sure you're comfortable with these before signing up.

Finally, ask about refund policies. Some companies will charge you extra if you use more electricity than anticipated, which is understandable. But they may not refund you if you use less than expected. If this concerns you, a budget billing plan may not be right for you.

It doesn't hurt to explore your options, even if you ultimately decide not to go forward with a budget billing plan. For many, though, it could make utility bills a little less painful each month and it might even help you keep more money in your checking account.