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Set up insulation around the water heater to keep heat from being wasted, but only the sides. To make sure the water keeps its temp as it exits the heater, insulate the first 6 feet of pipe outside the heater and keep the temperature under 130 degrees. Adjust the temperature according to the seasons, and when you go on vacation, turn it off. Leaks degrade a water heater's effectiveness and are more likely in an old heater, so be sure to check for them. Getting low-flow showerheads, an energy-proficient dishwasher and washing machine will cut down on hot water usage.

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