The Water Heater Hack That Can Save Up To 16% On Your Electric Bill

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According to the U.S. Energy Information Administration (EIA), retail prices for electricity have risen faster than inflation since 2022. The annual increase in electric rates in the United States has averaged 13% from 2022 to 2025, although the cost increases vary by region. The EIA projects that prices will continue to rise through 2026. Consequently, now is a great time to look for tips and tricks to save money on your electric bill.

One of the biggest contributors to your electric bill is your water heater, which the U.S. Dept. of Energy (DOE) estimates accounts for 14% to 18% of the energy costs for an average American household. This translates to up to $600 annually. Traditional water heaters aren't energy efficient because heat escapes through the surface of the tank, and you use more electricity to keep the water hot. Although you could save money by upgrading to an efficient water heater model — such as the tankless design — you might prefer to forgo the new purchase costs, keep your existing water heater, and use simple tricks to lower your utility bills instead. 

Now, don't stress yourself out with questions like, "Which is cheaper, taking a shower or a bath?" Instead, install an insulating jacket over your water heater. The jacket fits over the tank and reduces standby heat loss, so you waste less energy on keeping the water hot. This simple step can reduce your electric bill by as much as 16% each year, according to the DOE. You'll have to buy the blanket, but you should recoup the cost in about a year. Best of all, you don't have to sacrifice comfort — with the jacket installed, you'll be able to take a hot shower or bath whenever you want while still curbing your energy spending.

Expect to spend $30 to $50 on an average-quality water heater insulation jacket (although some electric companies offer blankets at lower prices than you'll find at retail). For the best insulative properties, consider a product like the Frost King SP60 insulator blanket, which costs around $70. A high-end vinyl-covered fiberglass jacket should be about 3 inches thick to provide an insulative value of R-10. You should use R-10 insulation in areas where you want to effectively block the flow of heat or where higher energy efficiency is necessary. You could save a little money with the SJ-80 Polyethylene insulator blanket, which costs $44 and has a lower insulative value of R-7.1. But if your water heater is in an area of your house that doesn't have climate control, such as a garage or unheated basement, stick with the higher R-value product.

Considering that the average household spends $400 to $600 on heating water annually, and that you could save up to 16% in water heating costs with an insulating blanket, adding the blanket could save you as much as $96 per year. The blanket would probably pay for itself within 6 to 18 months, depending on its cost and performance. 

Most people can install the water heater jacket themselves in about an hour and a half, meaning you can save money by making this a DIY project. Just be sure to follow the manufacturer's instructions (and the heater's user manual) closely to avoid creating safety hazards or interfering with the heater's operation.