Let's go over how to lower electric bills! When was the last time you took steps to lower your electricity bill? Unfortunately, many of us just assume that the amount we owe each month is the amount we’re stuck with. After all, we have to use electricity. But you might be surprised just how easy it is to reduce your energy bill in a big way.
Before we get into how to save money on electric bills, check out the benefits of lowering your bill and just how much you can potentially save.
The benefits of a lower electric bill
According to the U.S. Energy Information Administration, the average monthly electricity bill in the U.S. in 2019 was $115 per month. Residents of Hawaii, Connecticut, and Alabama have the highest monthly bills.
Often, figuring out how to lower electric bills just doesn’t seem worth it. After all, can we really save more than a few dollars here and there? But, in reality, you could save as much as 50% of your monthly energy bill with a few changes to your home. For the average homeowner, that could be nearly $700 per year in savings that you can put toward other financial goals.
Top 13 ways how to lower electric bills
Ready to start saving money on your electricity bill? These 13 simple steps will show you how to lower electric bills by as much as 50%.
1. Get an energy audit
One of the easiest ways how to lower electric bills is to do an energy audit. An energy audit is when a professional walks room-by-room through your house to find places where it might be losing energy. This audit can help you identify air leaks, poor insulation, low-efficiency lighting, and more.
Many electric companies offer energy audits, often as a free service. If your electric company doesn’t offer energy audits, you can follow the instructions from the Department of Energy for a DIY audit.
2. Lower your electric bill by adjusting your thermostat
Changing the temperature on your thermostat is truly one of the simplest ways how to lower electric bills. According to the Department of Energy, turning your thermostat back by 7-10 degrees for eight hours per day can save you as much as 10% on your electricity bill.
Many thermostats today can be programmed with set schedules. For example, you can program your thermostat to adjust when you leave for the day and then return to a more comfortable temperature during the hours you’re home.
3. Replace your air filters
Air filters are designed to catch any dust, dirt, pet hair, and more and prevent those particles from making their way into your HVAC system. The Department of Energy states that changing your air filters on the recommended timeline is the most important maintenance task for your air conditioner. In addition, it can lower your electricity consumption by anywhere from 5% to 15%.
4. Increase the temperature on your refrigerator and freezer
Refrigerators and freezers are often set several degrees cooler than what’s actually needed to keep your cold and fresh. According to the FDA, food safety guidelines recommend that refrigerator temperatures be kept at 40ºF or lower, while freezers should be kept around 0ºF. So if yours is set lower, consider increasing it a few degrees.
5. Turn down your water heater
Manufacturers often set water heater thermostats at 140ºF, but most households only require a maximum temperature of 120ºF. Lowering the thermostat on your water heater has several benefits:
- Lowering the temperature eliminates a safety hazard caused by scalding water
- It slows mineral buildup and corrosion in your water heater and pipes
- It lowers your electricity bill by as much as $400 per year.
Turning down the temperature on your water heater is how to save money on electricity fast!
6. Wash clothes in cold water
90% of the electricity needed to run your washing machine is a result of heating the water. A simple way to reduce your energy use in this area is to simply wash your clothes in cold water. This change can save you about $63 per year on your electricity bill.
7. Unplug appliances to lower electric bills
Phantom loads refer to the energy that your home appliances use when they’re in standby mode. These phantom loads cost homeowners an average of $100 per year, but you can avoid them by unplugging and turning off appliances when you aren’t using them.
While it’s not realistic to unplug your large appliances when they aren’t in use, you can certainly do so for smaller appliances like coffee makers, stand mixers, and air fryers. Unplugging those unused appliances is how to lower your electric bill with minimal effort.
8. Save money on indoor lighting
Making a few changes to your indoor lighting can really make a difference in your electricity bill. The easiest place to start is to turn off lights in rooms you aren’t using and only use your indoor lights later in the day when natural light isn’t sufficient.
Another change you can make is changing your light bulbs. According to the Department of Energy, LED lights use 75% less energy than standard light bulbs and last 25 times longer. So not only will you save money on electricity, but you’ll also save money on lightbulbs.
Finally, you can save money on lighting by installing dimmers in your home. With dimmer switches, you can lower wattage and output, which helps to save energy. Saving energy is how to save money on electric bills.
9. Install solar lights outside
Solar power is an excellent way to reduce your reliance on the electricity grid and reduce your energy payments, but home solar panels aren’t practical or affordable for everyone.
However, an easy way to incorporate some solar power into your home in a cost-effective way is to install solar lights outside your home. Replacing the lights in your yard with solar lighting is how to save money on electric bills while enjoying your outdoor space.
10. Maintain your HVAC system
Air conditioners make up about 6% of electricity use in the United States, costing homeowners about $29 billion per year. Additionally, they release 117 million metric tons of carbon dioxide into the air.
While people in most of the country can’t entirely forego their air conditioning, you can take steps to ensure your system runs as efficiently as possible. One of the best ways to do that is to schedule annual maintenance for your HVAC system. Then, you can identify any inefficiencies and ensure the air circulating your home is clean.
11. Upgrade your appliances to lower electric bills
The government-backed Energy Star program identifies energy-efficient products that can help consumers’ wallets, as well as the environment. If your home appliances are more than ten years old, consider upgrading to Energy Star products.
For example, an Energy Star certified washing machine uses 25% less energy and 33% less water. Over the lifetime of the product, you can save about $370 in energy costs. And that’s just for one appliance — imagine the savings if you had only energy-efficient appliances. Investing in energy-efficient appliances is how to lower your electric bill and help the environment.
12. Switch to fans and lower electric bills
In the summer months, air conditioning is one of the biggest factors leading to higher electricity bills. When temperatures rise, people automatically reach to adjust the thermostat. But you might actually be underestimating the power of your ceiling fans.
A ceiling fan can help a room feel cooler and uses 10% of your air conditioner's energy. So cutting off the air conditioner and switching to fans is how to lower your electric bill in a big way!
13. Take advantage of off-peak rates
For people on a time-of-use electricity plan, your rates vary during certain hours of the day. For example, rates are higher during peak hours when lots of people are using electricity. These hours generally include weekdays and evenings, while late nights and weekends have lower demand.
One way to take advantage of these rate-of-use plans is to run appliances like your dishwasher, washing machine, and dryer during early morning, late-night, and weekend hours.
What you can do with the money you save
Learning how to save money on electricity and making the recommended changes in your home can save you hundreds of dollars per year. But then you might find yourself asking — What should I do with that money instead? So here are a few ideas.
Stop living paycheck to paycheck
Polling from the American Payroll Association has consistently shown that most Americans live paycheck to paycheck. A 2020 survey found that 69% would experience financial difficulty if their paychecks were delayed for a week. And while it would be easy to blame this statistic on the pandemic, the numbers were actually worse in 2019.
Reducing your monthly expenses by learning how to lower your electric bill is one of the best ways to begin breaking the paycheck to paycheck cycle. You can instead put that money into an emergency fund for each amount you reduce your bills by.
Pay off debt
Debt is a huge financial and emotional burden for many American families. Freeing up money each month from your electricity bill can help you increase your monthly debt payments and reach debt freedom more quickly.
Another benefit of reducing your electricity bill is that you have more money to put into savings. You can start by building your emergency fund with a few months of expenses. Then you can start saving for other financial goals like a vacation or a down payment on a home.
Investing is perhaps the best way to build long-term wealth. And the best part is that it doesn’t require a lot of money. Even just a small amount of money invested each month can make a huge difference in the long run.
Let’s say you were able to knock $50 off your monthly electricity bill and put that money into a brokerage account with an 8% annual return. In 30 years, you would have more than $68,000. So while $50 might not seem like much, compounding in the market is what really makes the difference.
So, learning how to save money on electric bills can free up money for things such as paying off debt and investing!
Learning how to lower electric bills saves you money
So, now you know how to save money on electricity and can start lowering your monthly expenses. Even the smallest changes around your home can make a sizable difference in your annual electricity costs. The Department of Energy has an entire section on its website devoted to helping to reduce energy costs in your home, so check there to learn more ways how to lower your electric bill.
And remember that while saving money is great, it’s equally important to have a plan for that money that’s not free in your budget. It would be easy to spend that money, but it will go a lot farther if you put it toward paying off debt, investing, or reaching other financial goals. Learn more about ditching debt and saving money with our FREE financial courses and worksheets!