The idea of saving money often makes people think they'll need to make major changes in their lives. Although a challenging task, you can reduce your expenditures without undergoing unpleasant adjustments.
Here's five reasons why utilities should be part of your money-saving strategy.
Utilities cost more than you think
A lot of your money is spent on utilities. In the United States, energy expenditures represented seven per cent of after-tax income for all households in 2016.
Expenditures can go even higher according to your income. People with higher buying power tend to have more appliances and devices at home. And, if you plan to move to a larger house, guess what: that's also going to increase your utility expenses.
Bigger houses require more time for heating or cooling, which can make your bills go up significantly. In Canada, for example, space heating and cooling account for 64 per cent of the energy used in the average Canadian home.
Vampire appliances and devices on standby mode
There's a reason we call utilities "living expenses." They are indeed some of our main survival tools. Yet, a lot of those so-called living expenses are not necessities at all, and vampire appliances are a prime example, as they drain your money without you even noticing.
Some of the most tricky, energy-consuming appliances are TVs, video game consoles, computers, DVRs and cell phones, due in large part to standby mode.
I know, it's super-practical to leave your devices on sleep mode, but you spend a lot of money while they "sleep."
According to the United Kingdom's Energy Saving Trust, you could save 30 British pounds (around $50 in Canada) per year by avoiding standby mode.
Don't underestimate smart upgrades
Smart homes aren't only about cool trends. From light bulbs to dishwashers, there are plenty of devices for you to replace at home, which can save you significant sums of money.
The idea of buying new products to save money may not initially make sense, but energy-efficient devices generally offer great payback times. Sometimes, for bigger appliances, you can see a difference in your bills in the first month.
According to Energy Star, an energy-efficient computer will use about 60 per cent less energy. For fridges, the payback rates are even higher. You could earn back up to $1,405 in five years, depending on the age of your old friend, and the efficiency of your new one.
Research more about fixed and floating rates
In deregulated markets, electricity and natural gas are available in floating or fixed rates. Whether an investor or a money saver, you must learn the difference between these two plans if you intend to save on your utilities. Each one of them is ideal for a specific type of buyer.
Fixed rates give you more predictability; since you pay for fixed prices, you can expect what to pay at the end of every month. This option is valuable for people on a quest for stability or who can't afford abrupt price changes. Sometimes fixed-rate purchasers see themselves paying more than floating-rate buyers, but these consumers are more worried about predictability than risky money-saving moves.
Floating rates, on the other hand, won't provide you with cost certainty, but can guarantee reasonable savings when they're low. Yes, prices vary, but they can be lower than the fixed rates for years depending on where you live. With a floating rate, your savings can be maximized, but you never know how long they'll last.
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A team effort
The exciting thing about utilities it that they're one of the few monthly bills that everybody at home can affect. From children to grown-ups, everyone is responsible for making homes more energy efficient.
Once the whole family starts working together on this money-saving project, expect to see your energy bill go down. If you have kids, why not make it their first budgeting lesson?
Sixty-seven per cent of Canadians are not confident about their ability to handle their finances. Including your kids in the budgeting process will increase their financial literacy and save them plenty of time and money in the future. The best thing is that the more they learn, the more they will contribute to reducing energy bills.
So, instead of buying cheaper products or eating out less, why not pay attention to utilities, a small detail of day-to-day life, that's draining your money?
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