This guide to household bills will set out how much it costs to run a home, ensuring you’re not paying more than you need, potentially wasting hundreds of pounds every year.
Some expenses pop up like clockwork. Others vary from month to month. From energy bills to council tax, from water to gas and electricity. Here, we'll run through the average bills that UK households face every month and offer tips on how to keep on top of them.
We know insurance is often an upfront cost, but it could help protect you from bigger expenses down the line.
1. Council tax
How much council tax we pay can differ greatly, from house to house and even from one street to the next.
Houses are classed into different bands by the local authority and council tax is charged according to these bands. It’s important that you are aware of any changes to your council tax band if you want to stay on top of your household bills.
The average Band D council tax bill in the UK
Using Band D as an example, the average tax in England for 2022-23 is £1,966 - up by £67 or 3.5% on the previous year of £1,898. Adding this figure to other household bill increases will significantly alter your monthly budgeting.
Council tax will also differ greatly depending on your local authority. Again, using Band D as an example for 2022-23, within London alone council tax can vary between £864.13 to £1,660.24 just across the River Thames in the borough of Lambeth.
You can check your council tax band here to stay on top of how much you pay.
2. Gas and electricity
You can choose to pay quarterly, monthly or annually for your gas and electricity.
Paying quarterly or annually
Paying quarterly or annually means you will be sent a statement for the exact amount of gas and electricity you’ve used, provided you’ve been supplying them with accurate meter readings. At the end of each period, you’ll be billed for that amount.
Paying via direct debit
Monthly direct debits can be a good way of avoiding paying a large sum every quarter or year. Your energy provider will work out an estimate of what you’re likely to use over 12 months and then spread that amount across 12 monthly direct debits.
If your usage proves to be more or less than anticipated, then the direct debit amount will be calculated to try and avoid any surplus or shortfall in your account. If you end up in credit, some energy providers may offer an interest rate on the amount while it sits in your account.
Getting a smart meter installed
Smart meters are an excellent way of staying on top of your energy usage. They help you to see how much gas and electricity you’re using each day, both in money terms as well as energy units.
There are different tariffs to choose from and when you get your bill, at least you know it’s accurate. The smart meter sends data directly to your supplier.
Tackling rising energy prices
The energy price cap increased by £693 in 2022 for approximately 22 million customers - a rise of 54%. This is understandably worrying news for many people but there are ways to go about tackling the hike.
According to Citizens Advice, if you're on a fixed price tariff, you might be better off staying with your current supplier until your contract ends. Shopping around when your fixed period is coming to an end is an option too.
It’s also worth considering dual fuel tariffs, rather than having separate providers for gas and electricity. These come with a discount, while online-only accounts also generally offer a discount over receiving bills and statements by post.
You may also want to read save money on your heating bills for more handy hints.
To assess whether you’re paying the right amount for your water usage it’s important to understand that rates vary greatly across the country, depending on the size of your locality and the availability of water in your area.
The average water bill in the UK
Water.org.uk estimated the average UK water bill increased to £419 in 2022.
How can I lower my water bill?
To lower your water bill you need to understand how companies calculate your water usage.
The first is unmetered and calculates a set rate that is decided upon by your home’s ‘rateable value’. It's based on your home’s size and location, along with other factors.
The second method is metered, where you are billed for the amount of water you actually use. If you feel your bills are high, try switching to a metered bill instead.
4. Phone, broadband and TV bills
If you’re trying to save money on household bills, you may want to review your TV package and cut back on any channels you don’t use. Also look at your broadband speed using a speed checker. If it’s much lower than advertised, you could consider cheaper packages.
- Before switching phone, TV, or broadband providers, it’s probably worth checking when your other contract ends to avoid unexpected costs
- Pay attention to hidden fees in your contract and shop around to see if these are standard across all providers
- Bundle your TV, Phone and Broadband package into one comprehensive monthly agreement and shop around for the best price
If you watch TV you’ll need a TV licence to pay for the live programmes when they’re televised.
Remember, you only need a licence if you watch live TV or use the BBC app iPlayer.
5. Mortgage repayments
We love home ownership in the UK, but are we getting the best deal when it comes to paying our mortgage? Here are three steps to paying off your mortgage that may save you money in the long run.
Pay additional fees upfront
Read the details of your mortgage agreement and make sure that you’re only paying for your mortgage repayments, rather than additional fees that could have been more cost effective to pay upfront.
Once added to your mortgage repayments the likelihood is you’ll be paying interest on your additional fees as well as your repayments, which may increase your monthly payments.
Budget to overpay monthly and annually
One of the quickest ways of paying your mortgage is paying more than you need to every month or every year. So, if you’re due a performance-related bonus every year from work, set this aside to pay off your debt sooner.
You’ll have to check whether your agreement allows you to do this, Some lenders may incur a charge if you overpay by more than 10%, so check before you do - otherwise you’ll be hit with a hefty fee that wipes out the benefit of paying more than you owe.
Re-mortgage to cheaper deals
If you don’t re-mortgage to more cost-effective mortgage deals throughout your repayment term, you could find that you’ll eventually end up paying your lender's standard variable rate. This means that the interest you pay on your mortgage could change every month.
Without re-mortgaging you could end up paying thousands more for your home over the course of your repayment term.
6. Home insurance
Whether you rent or own a property, insurance is an important consideration when budgeting for household bills.
If you own a property, you will most likely have buildings insurance as a condition of your mortgage agreement.
When you rent your property your landlord/lady will have a certain level of insurance in place to cover their property, but this may not suit your demands and needs. It’s worth making sure you know exactly what’s covered as a result of an insured event.
What does buildings insurance cover?
Buildings insurance covers the cost of repairing or rebuilding the structure of your home against damage by fire, storm, flood and other similar cases. The policy also covers other permanent structures on your land, like walls, garages and outbuildings.
What does contents insurance cover?
Contents insurance covers your possessions within the home against insured events. This can include electrical equipment from TVs to washing machines, plus your furniture, curtains and clothes and personal effects like bikes, mobile phones and jewellery.
7. Home repairs and maintenance costs
If you’re wondering how much maintenance work to your property will cost over the duration of a year a good rule of thumb is to use the 1% rule.
If your property costs £200,000 to buy, then put aside at least £2,000 per year to pay for things such as roof repairs, boiler replacements or painting and decorating.
You may not spend the entire amount every year, but throughout the course of your home ownership this will add up and provide a suitable contingency fund should major renovations be needed unexpectedly.
Do your best to keep saving money at home
We know that running a household can be expensive, especially with costs on the rise. But there are a few everyday things you can do to help save money – from checking your phone, TV and broadband bills to annual and monthly budgeting.
It’s important to stay on top of all your outgoings, as this’ll give you a better idea of where you might be able to save.