Bills, Bills, Bills – A Guide to Staying in the Black

It’s little wonder that households in the UK are increasingly turning to renewable energy sources such as solar power, and not only because of the environmental benefits of this practice.

After all, this also delivers long-term financial benefits, especially when you consider that more than half of all British households saw an increase in the combined cost of energy in April.

In total, the new cap could see households pay an additional £117 each year, with this hike likely to be unaffordable for a growing number of families nationwide. Below, we’ll explore the average cost of bills in the UK whilst asking why it’s important that they’re settled on time?

Calculating your Monthly Bills – The Key Consideration

There’s no doubt that whilst bills for your mobile phone, Internet usage and credit card charges may also need to be settled promptly each month, utility bills pertaining to gas, electric and water dominate your monthly outgoings.

A quick glance at the data reaffirms this, as whilst it’s hard to calculate average utility bills across the UK due to a number of different variables, market regulators such as Ofgem and Severn Trent Water have worked hard to estimate the typical burden shouldered by households.

In the case of gas and electricity, for example, Ofgem estimated that the average dual fuel tariff was fixed at £104.50 per month (or £1,254 a year) as of April 2019.

When it comes to water and sewerage, estimates from Severn Trent reveal that the average household bill in 2019/20 will be £354 per year (or £0.97 a day).

Unlike gas and electricity bills, this average total has remained relatively stable for the last few years, whilst there’s no suggestion that these circumstances are likely to change any time soon.

How Much do Households Pay on Bills Each Year?

If we combine these average annual bills, we see that home-owners are liable to pay around £1,608 per year on utilities alone.

It’s also important to note that the average band D council tax bill increased by 5.1% to £1,671 in 2018/19, more than doubling some household’s liabilities to a whopping £3,279.

Then comes the average mobile phone bill, which is currently estimated at around £439 per year in the UK.

Throw in another £360 for maintaining a landline and broadband connection in your home, and most households have to fork out more than £4,000 before they even begin to tackle their credit card debts and keep a roof over their head.

This breaks down to an average monthly repayment of £339.83 per month, whilst the recent hikes in utility rates and council tax bands means that the cost of living is also growing at a faster rate than earnings.

How to Tackle your Bill Repayments?

Despite the fact that many of these payments are classed as non-priority, failing to settle your bills on time can be extremely damaging.

Utility companies are able to take you to court for late or missed payments, for example, whilst recent law changes means that these failures to settle your bills may impact negatively on your credit score.

In the case of credit cards, missed repayments can also trigger the accumulation of interest on your account, and force you to pay considerably more that you’ve actually spent.

With this in mind, the question that remains is how can you strive to pay your bills on-time? Your first step should be to create a detailed financial budget, which calculates the precise amount of disposable income that you have by subtracting your monthly outgoings from your salary.

Then, you’ll need to list your bills and find out when each payment is due, whilst identifying the minimum amount that needs to be repaid each month.

In instances where you can comfortably repay your bills from your earned income, we’d recommend setting up Direct Debits and automated payments to ensure that these are settled on-time each month.

However, if you’re struggling to meet your commitments, you’ll need to communicate this to your creditors and negotiate a compromise. In some cases, this may mean entering into a debt repayment plan, which can consolidate your debts into a single, monthly sum that can be paid for a specified period of time.