Hot water accounts for 13% of the typical utility bill, so improving your heater's efficiency can go a long way toward saving energy and cutting down on carbon emissions. Consider wrapping your old heater in an insulating jacket, which costs around $15 and will help reduce the amount of heat lost through the tank walls by 25-40%.
Or save energy by installing a tankless water heater, also called a demand water heater, which heats up H2O when you need it. With standard water heaters, water sits in the tank unused which wastes energy while slowly losing heat. That waste can add up. With a tankless water heater, you'll save 24-34% energy versus standard heaters, according to the U.S. Department of Energy. This also means you won't run out of hot water in the middle of a shower. One thing to consider is a gas-fired tankless heater rather than an electric model, which requires a substantial amount of juice to run. Tankless units cost a little more than conventional water heaters up front, but save money over time.