How would you like to invest $30 and receive a $45 dividend on your investment each year thereafter?
This is basically what you do when you make certain energy-efficient upgrades to your home to reduce your expenses.
And now is the time to make improvements: Electricity and natural prices are on the rise, but an energy-efficient home can lower those utility bills.
If you follow the steps suggested below – especially if you do the work yourself – you could save a lot on electric and gas bills. And if you view the upgrades 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.
The high cost of electricity and natural gas
If you’re paying to power your home, you know the dollars can really add up.
The price per kilowatt hour (kWh) of electricity in the United States has fallen from nearly 14 cents to 15 cents over the past year, according to the Energy Information Administration. Although a single penny may not seem like much, the average American household uses nearly 900 kWh of electricity every month.
This means that the average monthly electricity bill has increased by around $9 in 2022 to around $135. But your bill can vary greatly depending on where you live and whether you also rely on alternative energy sources like gas or solar.
And it’s not just electricity prices that are skyrocketing. Natural gas prices peaked in 13 years earlier this year and are expected to continue growing, due to a healthy mix of weather, inflation and supply shortages.
9 energy-efficient home renovations that will save you money
- Insulate the water heater
- Install a smart programmable thermostat
- Turn off the light bulbs
- Bundle the water pipes
- Replace ceiling fans
- Buy a new refrigerator
- Insulate the attic
- Seal air leaks
- Replace the toilet flapper
Inflation and extreme weather conditions may be out of your control, but you can actively lower your gas and electric bills by investing in your home’s energy efficiency.
And it doesn’t have to be a major renovation, like new windows or a better roof. Small, affordable improvements can make your home more efficient and add up to real savings.
Before starting a home improvement project, consult the Energy Star website to find out if the product you need is eligible for a tax credit or rebate.
Ready to start? Here are nine ways to save money while upgrading your home.
1. Insulate the water heater
A liner for your water heater will cost around $30 and you can install it yourself in about an hour.
Don’t worry: you can quickly recoup every penny spent on the jacket. According to experts from the Ministry of Energy, insulating a hot water tank saves 7% to 16% per year.
In other words, assuming average hot water costs $438 to run annually, you’ll have an extra $30-$70 in your pocket every year.
If you are able to make a larger initial 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 upside down – they draw heat into the unit instead of expelling it.
A family of four could save more than $350 a year on their electric bills, compared to a standard electric water heater, according to the DOE. The DOE estimates the cost of the switch to be around $800, so this family of four would start to see savings. after a little over two years. Over the 13-year life of the heater, expect savings of $3,750.
The Energy Star site has a quiz to help you decide if heat pump water heaters are right for your home.
2. Install a smart programmable thermostat
You don’t need as much heat (or cold air) when you’re in bed at night, and you need it even less when you’re away from home (assuming you don’t have pets at home). But you don’t want to roll out of bed on a cold winter morning or come home to a hot summer house.
A smart thermostat solves these problems by automatically adjusting temperature settings for you.
Ten minutes before getting up in winter, the heating comes on. Ten minutes before you get home from a hot summer day at work, the air conditioning adjusts to cool the house. You only use the heating and air conditioning when you really 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 $40, many models are fairly simple to install on your own and can pay for themselves in less than a year.
3. Turn off the light bulbs
Another bright idea to save money? Replacing your bulbs.
Light-emitting diode (LED) bulbs are 90% more efficient than traditional incandescent bulbs and can last up to 20 years (approximately 100,000 hours of operation).
LEDs used to be expensive for a single bulb, but today you can get a six-pack of LED bulbs for around $10.
By replacing incandescent bulbs in your home with LED lights, you can save approximately $225 in energy costs per year, according to the EPA’s Energy Star program.
4. Bundle the water lines
Bare water pipes give off heat, so you need to set the water heater temperature higher to get a hot shower at the other end of the house.
Solve that problem with a bit of pipe insulation: a cheap foam tube with a slit in the side. Just cut it to the required length with scissors and push it over the pipes.
This project will take you about 3 hours for a small house and cost $10 to $15 in total, according to the Department of Energy. Each year, you will save 3 to 4% by heating your water.
5. Replace ceiling fans
Ceiling fans in general can help you save on heating and cooling costs.
In the summer, spin the fan blades counterclockwise to generate a cool breeze, reducing the need to run more expensive air conditioning. Rotating the blades clockwise pushes warm air back up into the room, helping to reduce winter heating costs.
You can save even more 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 bulbs in light fixtures.)
6. Buy a new refrigerator
If your fridge is working well, there’s usually no good reason to replace it, even if the new one is a bit more efficient. But if you have a fridge that’s over 15 years old, it might be time to replace it.
To find out exactly how much you can save on energy costs over a five-year period, enter your current refrigerator information into the Energy Star Flip My Fridge Calculator.
You can sell older, working refrigerators online to make easy money or donate appliances to charities like St. Vincent de Paul, the Salvation Army, and Habitat for Humanity.
7. Insulate the attic
If you use your heater or air conditioner most of the time, you could save a lot of money by adding new insulation to your attic.
Upgrading attic insulation from R-11 to R-49 is something you can do yourself in a day or two for around $750, according to HouseLogic.com. (The cost is about double if you want professionals to install it.)
You’ll save about $600 a year on heating and cooling costs, depending on where you live and what type of heating you have. It also adds value to your home if you decide to sell in the future.
8. Seal Air Leaks
Check for cracks or gaps around door frames, windows, and entry points for pipes and cables. You lose heat from these spaces in the winter and cool air in the summer, which increases your heating and cooling costs.
It takes about $20 worth of caulking and peel and stick insulation strips to seal them all over the house, according to Homewyse. This is a project you’ll want to do yourself – it’s pretty easy, and you’ll spend an additional $200-$500 in labor to have professionals handle it, depending on the size of your home.
If you are 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 weather stripping.
doing this will reduce your heating and cooling costs by an average of 10-20%, depending on where you live. That’s potentially hundreds of dollars saved for an afternoon and $30 investment.
9. Replace the toilet flapper
If you hear your toilet running when not in use, you probably have a leaky flapper.
It’s not just an annoyance – a leaky flapper can wastes 180 gallons of water every week.
You can buy a new reed valve for less than $5, saving you $25 a year.
Contributor Timothy Moore writes on a variety of topics for The Penny Hoarder, including banking, insurance, automobiles and lifestyle for The Penny Hoarder. His work has been featured on Debt.com, The Ladders, Glassdoor, WDW Magazine, Angi and The News Wheel. Steve Gillman and Tiffany Wendeln Connors also contributed to this post.