How to prepare financially for energy costs this winter.
Keep your bills low and your thermostat high this winter
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According to the National Energy Assistance Directors Association, the average cost of home heating is estimated to increase by 17.8% since last winter’s heating season. With temperatures lowering and heating bills rising, it's time to start thinking about the financial steps you can take to keep your energy costs low this winter.
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1. Revise your budget
Building an emergency fund is one way to manage winter energy costs.
Energy prices are likely to be higher this winter. When putting together a budget, using last year's bills as a starting point is a good idea, but it's safe to assume that you will need to put aside a bit more in 2022. “I’m encouraging families to revisit their budget for home heating this winter including bills like electric, gas, heating oil, etc.,” says Charles H Thomas III, founder and financial advisor at Intrepid Eagle Finance in South Carolina.
Thomas suggests increasing estimates for winter heating by at least 10 to 15 percent from last year.
2. Save ahead for winter energy costs
It's never too early to start saving for the winter. Open a savings account and put aside money each month for your energy costs. By the time winter rolls around, you’ll have enough in your savings to cover those more expensive winter bills. An emergency fund just for winter energy bills is a good way to prepare for the higher energy costs.
If you’re just starting now, look for ways to trim other expenses to make room for the larger home energy bills that are coming. Cutting a few, simple, non-essential items may be all you need to do to build up some savings.
3. Give your home an energy audit
There are several sensible home improvement steps you can take to increase the energy efficiency of your home. However, before you order a bulk batch of weatherstripping, find out how efficient your home really is with an energy audit. Doing so will also help to get inefficiencies resolved and you might be able to get rebates for any new equipment that may be needed. And even better, depending on your state, the audit could be free.
“In many states, they are now offering free or seriously discounted energy audits. A contractor will come to your house and test for air leaks, inefficient equipment, insulation, and more,” says Jay Zigmont, a certified financial planner and founder of Childfree Wealth. “In many cases, they are able to fix some issues right then and there. If they can't fix issues, such as an old, inefficient HVAC system, they may be able to connect you with discounts and rebates.”
4. Fill oil tanks when prices are low
Don’t wait until the last minute to fill the oil tanks that you will need to heat your family home this winter. Buying your oil when prices are low is a smart financial move that will help to lower your family’s energy costs.
“For those with oil heat, not gas, it can be advantageous to fill tanks during off-times during the year, or when prices drop,” says Jeremy Bohne, financial advisor and founder of Paceline Wealth Management in Boston, Massachusetts.
5. Sign up for a budget plan from a utility company
With a budget plan, you’ll get an estimate for your annualized energy costs and you pay a more consistent monthly home energy bill throughout the year. After summer or fall, you may have acquired a credit which will help with winter heating costs.
“I am a big fan of budget plans offered by most utility companies,” says Nicholas Tilli, a certified financial planner and founder of Tilli Wealth Management in Minnetonka, Minnesota. “While this won’t necessarily “reduce” your bill, it does help make it more predictable.”
If you are unable to join the budget plan from a utility plan, Tilli suggests coming up with your own budgeting approach to your energy bills. In this way, you won’t be surprised by higher energy bills in winter months.
“I suggest you “search” your historical transactions at your bank and see what your energy costs were last year during the winter months. This will help you forecast your budget expectations for the coming months ahead so you’re not taken completely off guard by the higher monthly energy bills,” Tilli says.
6. Don’t leave the thermostat at the same temperature
Home heating bills are estimated to increase by 17.8% this winter.
Here’s an easy, money-saving tip that will lower energy bills.
When you leave the house to go to work, be sure to lower your home’s thermostat. This simple act will help to trim your home energy bills. You can turn up the heat when you return home from your job.
“If you’re away for work or other outings, (lower) the thermostat down a few degrees,” Thomas says. “A Department of Energy study found that changing the thermostat by 7 to 10 degrees for 8 hours a day could save up to 10% a year. A programmable thermostat can help with this too.”
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