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How To Calculate Your Electricity Bill

The key is to first understand what appliances and behaviors are factoring into your electricity cost, so you can find areas to save and reduce your usage.

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A hand holding an iPhone with the calculator app showing and paperwork on the table.

No one likes to think about their electricity bill.

But as it turns out, spending a few extra minutes every month examining your bill can help you lock in considerable savings on your electricity costs and lower your carbon footprint.

The key is to understand how your electricity bill is being calculated every month so you can find areas to save and reduce your usage.

According to the U.S. Energy Information Administration, the average electricity bill costs around $115 per month. This equates to roughly 877 kilowatt-hours of usage. But while these averages vary from state to state depending on electricity rates and usage habits, the strategies for calculating your costs and reducing your usage are the same.

Here are the three strategies for calculating your bill.

  1. Use an online estimation calculator
  2. Calculate your monthly bill manually
  3. Use a monitoring device

We’ll go through these three methods and give tips along the way for reducing your costs.

1. Use an online electricity bill estimation calculator

The most efficient and cost-effective way to estimate your electricity bill is to use an online calculator. The easiest-to-use electric bill calculators can give you a rough estimate based on which appliances you have in your home. These calculators use national averages to estimate your costs and require very little information to use. The downside is that they’re not as accurate as calculators that let you input more data about your usage.

For a more accurate estimation, we recommend using individual appliance energy calculators and then adding up the costs. Appliance calculators allow you to input things like the size of your appliance and how often you use it every month. While this method will require a bit more time and a little of your own math, it’s still the easiest way to get an accurate read of how much electricity you’re consuming every month.

2. Calculate your monthly electricity bill manually

The most accurate—and highest effort—way to calculate your electricity bill is to add up your usage costs manually.

This method requires that you know some formulas. Before we dive into those formulas though, it can be helpful to have a high-level understanding of how you’re calculating the costs.

Electricity costs = (how much you use your appliances) x (how much electricity your appliance uses) x (how much electricity costs at the time you’re using it)

The formulas you will need to know to manually calculate your electricity bill are:

  1. Watts = (amps) x (volts)
  2. Kilowatt-hours = (watts) x (usage) / 1000
  3. Cost = (kilowatt-hours) x (electricity rate)

The first step to manually calculate your electricity bill is to compile a list of all your major appliances.

You’ll want to make sure you include the appliances that use the most electricity in your calculations.

  • HVAC systems
  • Air-conditioner units and space heaters
  • Water heaters
  • Laundry machines and dryers
  • Refrigerators
  • TVs
  • Dishwashers
  • Lighting
  • Electric ovens and stoves

Once you have a list of all your major appliances, you need to calculate their wattage.

Wattage measures how much electricity is used by an appliance per second, and it’s measured in Watts.

Look on the back of the appliances or in the manual to see if you can find the Watts. If you don’t see a number for wattage, you’ll have to calculate it by multiplying the Amps by the Volts (most appliances include this information). And if you can’t find volts or amps, you can also try googling the model of your appliance to determine the wattage.

Once you’ve got the wattage, the next step is to determine how often you’re using each appliance every month.

Try to give as accurate an estimate as possible. Keep in mind that you might use some appliances, like your AC, for different amounts of time depending on season. You’ll likely have to calculate your bill for both the summer and the winter.

Next, you’ll need to know the rate of electricity in your state.

Electricity rates vary depending on several factors including the state that you’re in, the time of day, and demand. Since electricity rates can fluctuate so much throughout the day, we recommend using your state average which can easily be found online.

The final step is to plug in all the variables to the equations.

For each appliance, multiply the wattage by your usage. Then multiply your usage by your state electricity rate. Finally, add up all the costs of the appliances.

*Remember to divide the wattage by 1000 so that you do all your calculations in kilowatts. Electricity bill costs are calculated in kilowatt hours.

While manually calculating your electricity bill can be time-consuming, it is the most accurate way to get an estimate for your monthly electricity usage. If you really want to understand your electricity costs and usage though, this is the best strategy. You’ll be able to really determine which appliances are using the most electricity in your home so you can start to identify the best ways to save.

3. Use an electricity usage monitoring device

Electricity monitoring devices will give you an exact read of your electricity usage with very little effort. But this estimate comes at a cost.

The best electricity monitoring devices can cost you 100s of dollars. Of course, long term, this monitor will help you save money as you’ll be able to see which appliances are consuming the most energy and you can try to limit that usage. Not to mention, electricity monitors will save you a lot of time. The top-of-the-line monitors can send you information and data about your electricity usage right to your smart phone.

If you don’t mind the upfront cost, then you might want to invest in an electricity monitor—they’re powerful devices that can help you unlock insights about your electricity habits and take agency over your electricity usage.

Tips for reducing your electricity costs

Calculating your electricity bill is helpful for a variety of reasons. If you’re looking to rent an apartment, knowing your electricity costs will allow you to get a fuller picture of the costs of living so you can create a budget. Another major benefit of understanding your electricity bill is that you can start to identify areas to save money and reduce your overall electricity usage. Find out which appliances are costing you the most and come up with a plan to limit your usage. For more tips, check out our blog on how to unlock savings on your electricity bill.


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