How to Calculate the Cost of Utilities

If you need to decide whether you can afford both rent and utilities at a new apartment or simply need to develop a general monthly budget, calculating the cost of utilities is a useful and simple exercise.

Before you can begin, you need to clarify what falls under the umbrella term "utilities." Everyone requires running water and electricity, but other utilities depend on your lifestyle and budget. For example, when push comes to shove, you can live without cable TV.

Make a list that includes the essential services you literally cannot do without: water, sewer, electricity, gas and possibly trash pickup if use of a dumpster is not included in your apartment rental. Nonessential utilities include internet service, cell phone, cable TV and subscription services.

The best way to calculate your utility costs involves averaging your previous bills. However, utility usage tends to fluctuate based on the time of year, so take this into account. For example, you may use more water in the summer if you have a pool or frequently water your lawn. You might take cool showers in the summer and hot showers in the winter, which could affect your gas bill because many water heaters use natural gas instead of electricity.

Likewise, your electricity bill might decrease in summer if you choose to put clothes out on a line to dry instead of using the clothes dryer, which notoriously requires a lot of electricity to run.

Averaging your yearly bills helps to account for these seasonal rises and falls, but what should you do if you do not have any previous utility bills with which to work?

One way to estimate how much water or energy you currently use involves filling out a simple questionnaire on an online utility usage calculator. Once you receive the results of the survey, take note of the unit of measurement and the time period that the estimate covers.

For example, one thorough water calculator provided by an Australian water company gives usage in kiloliters per year. You will need to convert this into the unit of cost used by your local water company (typically per thousand gallons for U.S. customers).

For budgeting purposes, you will also want to convert the time period into months, if necessary. Then, look up your local water company's rate schedule to determine the charge per thousand gallons and multiply that by your usage estimate to get your billing estimate.

Electricity calculators also exist. Simply plug in the number of appliances you own, and the calculator will make a usage estimate in kilowatt hours based on the average energy consumption of those appliances.

Other utility bills remain the same each and every month, making it easy to factor them into your budget. For example, trash pickup likely costs $20 or less each month, with optional additions like curbside recycling or yard waste pickup.

As a final option, you can look at national averages for utility bills. But for large countries like the U.S., electricity and water rates can vary widely, skewing the results of these averages. For example, electricity in Hawaii costs 32.09 cents per kilowatt hour, whereas in many other states, like Louisiana, it costs around 8.84 cents per kilowatt hour. Instead of looking at national averages, try to look for regional averages or even city-wide averages.