How would you like to invest $30 and be paid a $45 dividend on your investment every year after that?
That’s essentially what you do when you make certain energy-efficient home improvements to lower your expenses.
If you pay for powering your home, you know that the dollars can really add up. The average monthly electricity bill in the U.S. in 2021 was $122, up $5 from the previous year. But your bill can vary widely depending on where you live and whether you also rely on alternative energy sources like gas or solar power.
If you take the steps suggested below — especially if you do the work yourself — you could save a bundle. And if you think of the improvements as an investment, you can enjoy a healthy annual rate of return and won’t pay income taxes like you would with regular investment returns.
9 Energy-Efficient Home Improvement Tips That Will Also Save You Money
When you invest in your home to lower your bills, every penny saved is yours to keep.
Ready to get started? Here are nine ways to save money by improving your house.
1. Insulate Your Water Heater
An insulating jacket for your hot water heater will cost $30 or so, and you can install it yourself in about an hour.
According to the experts at the Department of Energy, insulating a hot water tank saves 7% to 16% annually.
In other words, assuming the average hot water costs $438 to operate annually, you’ll have $30 to $70 more in your pocket each year.
If you’re able to make a bigger up-front investment, you may consider replacing your traditional electric water heater with a heat pump water heater.
Instead of generating heat directly, heat pump water heaters act more like refrigerators in reverse — they pull heat into the device instead of pushing it out.
A family of four could save more than $330 per year on its electric bills, compared to a standard electric water heater, according to the DOE. The DOE estimates the cost to switch is approximately $800, so that family of four would start seeing savings after a little over two years.
The Energy Star site has a questionnaire to help you decide if heat pump water heaters are a good fit for your home.
2. Install a Programmable Thermostat
You don’t need as much heat when you’re in bed at night, and you don’t need as much heating or air conditioning when you are out of the house. But you don’t want to climb out of bed on a cold winter morning or come home to a hot house in the summer.
A programmable thermostat solves these problems by automatically adjusting the temperature settings for you.
Ten minutes before you get up in winter, the heat turns on. Ten minutes before you get home after a hot summer day at work, the air conditioning adjusts to cool the house. You use the heating and cooling only when you actually need them.
A programmable thermostat can save you $50 on heating and cooling costs each year, according to the government’s Energy Star program. Starting around $20, many models are simple enough to install on your own.
3. Switch Out Your Light Bulbs
Another bright idea for savings? Replacing your light bulbs.
Light emitting diode (LED) light bulbs are 90% more efficient than traditional incandescent bulbs and can last up to 20 years.
LEDs used to be expensive for a single bulb, but today, you can get a six-pack of LED bulbs for around $10.
Before starting a home improvement project, check out the DOE’s Energy Star site to find out if the product you need is eligible for a tax credit or rebate.
By using the LEDs throughout your home, you can save about $225 in energy costs per year by replacing incandescent bulbs with LED lighting, according to the EPA’s Energy Star Program.
4. Bundle Up Those Water Lines
Bare water lines leak heat, so you have to set the temperature of the hot water heater higher to still get a hot shower at the other end of the house.
Solve this problem with a little pipe insulation: an inexpensive foam tube with a slit down the side. Just cut it to the required length with scissors and push it onto the pipes.
This project will take you about three hours for a small home and cost $10 to $15 total, according to the Department of Energy. Each year, you’ll save 3% to 4% heating your water.
5. Replace Your Ceiling Fans
Ceiling fans in general can help you save on heating and cooling costs.
In the summer, run the fan blades counterclockwise to generate a cool breeze — thus reducing the need to run the more expensive air conditioning. Running the blades clockwise helps circulate warm air that rises back down into the room, helping cut heating costs in the winter.
You can realize even more savings by replacing your old, inefficient fans with Energy Star certified fans, which are 60% more energy efficient than older models, according to the DOE. (And be sure to use your energy efficient light bulbs in the fixtures.)
6. Buy a New Refrigerator
If your refrigerator is working fine, there’s normally no good reason to replace it, even if the new one is a bit more efficient. But if you have a fridge that’s more than 15 years old, it might be time to replace that one.
To find out exactly how much you can save on energy costs over a five-year period, enter your current refridgerator’s info in the Energy Star Flip My Fridge Calculator.
7. Insulate Your Attic
If you run your heater or air conditioner most days, you might save some serious money by adding new insulation to your attic.
Upgrading attic insulation from R-11 to R-49 is something you can do by yourself in a day or two for about $750, according to HouseLogic.com. (The cost is about double if you want professionals to install it.)
You’ll save about $600 per year on heating and cooling costs, depending on where you live and the type of heat you have. It also adds value to your home if you decide to sell in the future.
8. Seal Those Air Leaks
Check for cracks or spaces around door frames, windows and entry points for pipes and cables. You lose heat from these gaps during the winter and cool air in the summer, adding to your heating and cooling costs.
It takes about $30 in caulking and peel-and-paste insulating strips to seal these up all over the house.
If you’re looking to replace an exterior door, a steel or fiberglass door is a more energy efficient option than wood. Some steel doors even have insulated cores, so no need for weatherstripping.
Doing this will cut your heating and cooling costs by an average of 10% to 20%, depending where you live. That’s potentially hundreds of dollars saved for an investment of an afternoon and $30. Not bad, right?
9. Replace That Toilet Flapper
If you hear your toilet running when it isn’t being used, you probably have a leaky flapper.
It’s not just an annoyance — a leaky flapper can waste 180 gallons of water every week.
You can buy a new flapper valve for under $10, saving you $20 per year.
Steve Gillman is a contributor to The Penny Hoarder. Staff writer/editor Tiffany Wendeln Connors also contributed to this post.