Trimming the Average Budget: Home Energy Costs

Housing – utilities, fuels, public services – $3,477/year

The average American family spends almost $3,500 a year just keeping the energy going in their home. Between heating, cooling, and running the multitude of electronic devices in our homes, we’re paying an average of $300 a month to the energy companies.

Fortunately, there are tons of actions you can take to reduce your energy bill each month and your home insurance bill. Yes, I’ve mentioned many of these before, but that’s because they work. They really do trim your home energy spending and are well worth doing if you’ve not done them before.

Cutting Down Your Home Energy Spending

Install a programmable thermostat

A programmable thermostat is a device that allows you to set up a daily schedule of what you want the temperature to be in your home. This allows you to have the temperature go way up (in summer, keeping the AC from unning) or way down (in winter, keeping the furnace from running) during times when no one is at home or no one is awake – automatically. Even though I work from home, we still have found substantial energy savings from our programmable thermostat simply because of the temperature alterations at night. They’re easy to install – it takes about half an hour, a screwdriver, and a lack of fear about flipping a breaker.

Air seal your home

Air sealing your home involves detecting where cold or hot air from the outside is coming into your home, causing the cooling or heating in your home to effectively “leak.” Air sealing is a weekend-long project that can drastically reduce the leakage from your home, causing your energy bills to drop significantly. Here’s a great guide for energy sealing from EnergyStar.

Install new windows if your home is older

Properly installed EnergyStar windows can drastically reduce the energy lost directly through the windows in your home. Do the windows in your home collect frost in the winter? Is there noticeably warmer or cooler air near your windows? If that’s the case, it’s likely that your windows are adding significantly to your heating and cooling costs and there’s a substantial savings in your future if you replace your windows with energy efficient ones.

Use natural gas

In almost all areas, natural gas is more efficient and vastly less expensive per month of use. If natural gas is available in your area, consider moving major appliances to natural gas when it comes time to replace them.

Use natural ventilation whenever possible

If the temperature is between 60 and 85 F (or perhaps even more of a range than that), turn off the ventilation system entirely and throw open the windows. Our windows are open almost constantly during the spring and early fall months to take advantage of the wonderful weather outside.

Take advantage of incentives for energy improvements

Many energy companies (and federal and state governments) offer direct financial incentives for making energy-related improvements to your home. Quite often, these incentives will pay for a significant portion of the improvement, allowing you to simply collect the rewards from a lower energy bill. Take a look at the Database of State Incentives for Renewables and Efficiency to get started.

Use fans

In the summer, ceiling fans do an effective job of utilizing breeze to make a room seem cooler than it actually is. Thus, you can easily afford to raise your thermostat a few degrees, trimming your energy bill substantially. In the winter, you can actually get away with lowering your thermostat a degree or two if you have ceiling fans. Adjust your ceiling fan to run counterclocklise in the summer and clockwise in the winter (see this ceiling fan guide for more details) to cause warm air to move up in the summer and move down in the winter.

Turn off lights and ceiling fans when you leave a room

It’s a simple habit – but a powerful one. If you leave four 75 watt light bulbs and a ceiling fan on in a room for even a couple of hours, you’ve lost a dime. Do it over and over again and you’re losing a lot of money. Get into the routine of just flipping the switch when you walk out of a room.

Move toward LED lighting

Yes, swapping out your lighting is a tried and true tactic for saving on energy, but CFLs are just a stopgap. LEDs are the ultimate best replacement for the bulbs in your home, as they have a very, very long life and use even less energy than CFLs. Use a mix of LEDs and incandescents in your home (incandescents still work best for natural lighting and reading lights, but LEDs are great for closets and hall lighting). Also, decorative lights are perfect for LED use.

Buy energy-efficient appliances

Study the energy efficiency numbers when you go appliance shopping and recognize that an appliance rated at 1,000 watts will consume about a dime’s worth of energy during every hour of use – and 100 watts will consume a penny of energy an hour. Use that for your calculations over a long lifetime – say, fifteen years – and you’ll often see that the energy efficient choice, though it’s a bit more now, is a huge saver over the long run. Add in the fact that there may be incentives (see above) for buying the efficient model and this becomes a no-brainer.

Get your major appliances erviced regularly

Your major appliances, namely your furnace and central air conditioner, serviced can lead to signifant savings. Simply getting your ducts flushed and having your unit checked over and tweaked can make a big difference in your energy bill. Plus, quite often, at least part of the cost of this will be refurnded by your energy company if you turn in a receipt.

Heat (and cool) less space

If you have unused rooms – or infrequently used rooms – turn off the vents in that room, turn off all energy-using devices in the room, shut the door, and use a towel to block any air flow under the door. This will help with energy bills in both the winter and the summer.

Keep your shades drawn unless you actually need the light

By default, the most energy-efficient position for your curtains and shades is to keep them drawn. That doesn’t mean you should never open them – by all means, let the sunshine in! Just make it a choice to open them – keep them closed by default. The only exception to this rule is in the winter, when it’s worthwhile to open up the curtains or blinds on the side of the house that’s receiving direct sunlight.

There are countless little steps you can take to improve your energy usage – these are just among the most effective I’ve found.

I want your help! In the comments, please let me know which of the tips you find most useful for trimming these costs. I’ll include the top choices in a comprehensive budget trimming guide at the conclusion of the series.

Trent Hamm

Founder & Columnist

Trent Hamm founded The Simple Dollar in 2006 and still writes a daily column on personal finance. He’s the author of three books published by Simon & Schuster and Financial Times Press, has contributed to Business Insider, US News & World Report, Yahoo Finance, and Lifehacker, and his financial advice has been featured in The New York Times, TIME, Forbes, The Guardian, and elsewhere.