We all know the old rule that no more than about a third of our income should go to pay for housing (rent, mortgage, etc.). Ideally, we should shoot for even lower. What about the rest of our bills, though? Do you have any idea what average costs are or what percentage of your income should go toward the average electric bill, for example? Surprisingly, most homeowners don’t!

According to the U.S. Department of Energy, the average American household spends about $110 per month on electricity. Data from the Bureau of Labor Statistics puts electricity costs as the highest utility for American homes, commanding an incredible 9% of household expenses. Even worse, the Energy Information Administration reported that high electricity rates make it hard for homeowners to pay these rates. In fact, almost a third of American households struggle to pay their energy bills, with 1 in 5 reporting that they had to reduce funding for food, medicine, and other essential items.

We all know the old rule that no more than about a third of our income should go to pay for housing (rent, mortgage, etc.). Ideally, we should shoot for even lower. What about the rest of our bills, though? Do you have any idea what average costs are or what percentage of your income should go toward the average electric bill, for example? Surprisingly, most homeowners don’t!

According to the U.S. Department of Energy, the average American household spends about $110 per month on electricity. Data from the Bureau of Labor Statistics puts electricity costs as the highest utility for American homes, commanding an incredible 9% of household expenses. Even worse, the Energy Information Administration reported that high electricity rates make it hard for homeowners to pay these rates. In fact, almost a third of American households struggle to pay their energy bills, with 1 in 5 reporting that they had to reduce funding for food, medicine, and other essential ite

The good news is, there’s a viable solution that can help many homeowners to reduce their energy expenses.  Solar energy is abundant in many areas, allowing homeowners who install suitable equipment to significantly cut costs, not to mention reduce pollution associated with typical energy creation.  Plus, in cities from Portland to Petaluma, solar incentives allow for rebates, deductions, financing, and more to help homeowners make the transition more affordable.

How can you tell if you’re paying too much for electricity and if switching to solar energy will help you lower electricity rates?  Here are a few things to consider.

Understand Your Electricity Rates


Many homeowners have the opportunity to reduce their average electric bill by installing solar panels, but if you want to be sure, you’re going to have to crunch some numbers, or simply ask your preferred solar provider to run calculations for you.  This starts by assessing your current energy bill.

Some months are obviously going to be more expensive than others.  If you live in a southern region with extremely hot summers and mild winters, you’ll likely spend a lot more on cooling your home in the summer than heating it in the winter, for example.  What you want to do is add up a year’s worth of bills to determine the average monthly cost for electricity.

When you switch to solar, the sunlight collected and turned into usable energy will eliminate electric costs, provided your region receives ample sunlight.  However, there is the cost of the panels, installation, and maintenance to consider, along with any additional energy you may have to purchase if there isn’t enough sunlight to power your home.

Many homeowners choose to finance the initial costs of installing solar.  Even with financing, most homeowners will pay no additional money out of their pocket for their solar system. Don’t forget to factor in rebates, tax deductions, net metering, or other federal, state, and local incentives you may be eligible for.

Understand Your Electricity Rates


Many homeowners have the opportunity to reduce their average electric bill by installing solar panels, but if you want to be sure, you’re going to have to crunch some numbers, or simply ask your preferred solar provider to run calculations for you.  This starts by assessing your current energy bill.

Some months are obviously going to be more expensive than others.  If you live in a southern region with extremely hot summers and mild winters, you’ll likely spend a lot more on cooling your home in the summer than heating it in the winter, for example.  What you want to do is add up a year’s worth of bills to determine the average monthly cost for electricity.

When you switch to solar, the sunlight collected and turned into usable energy will eliminate electric costs, provided your region receives ample sunlight.  However, there is the cost of the panels, installation, and maintenance to consider, along with any additional energy you may have to purchase if there isn’t enough sunlight to power your home.

Many homeowners choose to finance the initial costs of installing solar.  Even with financing, most homeowners will pay no additional money out of their pocket for their solar system. Don’t forget to factor in rebates, tax deductions, net metering, or other federal, state, and local incentives you may be eligible for.

 

Consider Sunlight in Your Region


Whether you live in Seattle, Tulsa, or Petaluma, solar exposure will vary.  The region you live in and the typical weather patterns you experience will have a major impact on the amount of money you can reasonably expect to save with solar power.  As you can imagine, more sun equals more savings. You also need to assess your home to make sure you have a slope (roof or hillside) facing the right direction to collect sunlight and to determine whether shade conditions could affect solar collection. In California, the average household can expect to reduce their electric bills 80%-90% with solar energy.

Learn What You Can Save with Solar Energy


A good place to start is by trying out a solar calculator, which uses information like your zip code, your average electric bill, and the orientation of your roof to help determine whether or not you can save significantly with solar power.  This is not precise, but it can give you a rough idea.

If you’re really interested in upgrading to solar power, you’ll need to arrange for a more in-depth assessment of your property and your circumstances, as well as factor in any incentives you’re eligible for.  When you consider your region and rates, then add inflation, incentives, and the percent of need likely to be met by installing solar, you’ll get a clearer picture of whether you’re overpaying and what you can save with solar energy.


Sources:
http://eyeonhousing.org/2015/03/average-monthly-electrical-bill-by-state-2013/
https://www.npr.org/2018/09/19/649633468/31-percent-of-u-s-households-have-trouble-paying-energy-bills
https://www.nerdwallet.com/blog/finance/save-money-putting-solar-panels-roof/
https://www.solar-estimate.org/solar-panel-calculators
https://news.energysage.com/much-solar-panels-save/