Your home is your largest investment. Besides the initial cost, a home is a series of operating systems within a larger system. Those systems use more energy than your car, and if the systems weren't efficient when you built or purchased your home, or if your home is over 10 years old, then it is probably time to consider updating those systems. New generations of Energy Star appliances, heating and air/systems, and environmentally friendly insulation can help make your home more energy-efficient and ultimately save you money.

Heating and Air
Heating and cooling your home takes nearly 56% of your energy budget dollars, making it the largest energy expense, according to Installing an updated HVAC system in a 2,000 square foot home will cost between $3,000 to $5,000 dollars, if you don't require any new electrical work or ductwork. If you do need any work besides the basic installation, the cost will increase to between $6,000 and $10,000 dollars. It will be several years before homeowners see their return on investment. If you plan to stay at your residence for five years, or if your home HVAC system is older than 10 years, then this may be an excellent investment. You will see even more savings if your current HVAC system is over 20 years old. In addition, you will significantly reduce carbon pollution and greenhouse gases with new systems.

Windows and Doors
A large portion of your energy dollars literally fly out the door. Replacing older windows can save you over $400 per year if you are replacing single pane windows. Replacement windows can cost anywhere between $200 and $400 to be installed. If you have newer windows, consider caulking them and using insulation around the frame to help increase your energy efficiency

One of the least expensive energy efficiency investments you can make is adding insulation to your home. Adding the correct amount of insulation could save roughly 20% on your heating and cooling bill. Finding the correct R-rating is crucial to knowing how much insulation you need. This is a home's insulating quality and it is determined by the weather in the area where you live. You can find an easy-to-read chart on the Energy Stars website.

Once you have insulated your home, it should last forever. This means that it is a one-time investment that keeps paying you by saving energy and lowering your cost.

Although lighting takes the smallest portion of your energy dollars, it still accounts for approximately 25% of your energy budget. Using compact florescent light (CFL) bulbs can save you money. The initial cost of the CFL bulbs is greater than traditional lightbulbs, but they last longer, put out the same amount of light and use up to 8% less energy.

Over the life of the CFL bulb, you will save an average of eight cents per kilowatt-hour, which works out to about a $45 dollar savings over the life of the bulb. Now, multiply that by the number of lightbulbs in your home and you'll be impressed with how much you save.

The Bottom Line
Many of these energy-efficient improvements require a large initial investment. The government's Energy and Recovery Act offers tax rebates for many energy-saving home upgrades to help offset the cost. Check with your tax expert to see if the upgrades that you are considering are covered.

Improvements such as insulation and energy-saving lightbulbs will give you almost immediate savings on the investment. On more expensive upgrades, such as windows, doors and HVAC systems, the savings won't be so immediately evident. It often takes several years for the investment to recoup the price. If you plan to stay in your home for more than five years, these improvements are worth the investment. If you plan to sell your home, then you must evaluate whether those investments will improve your home's resell value.

Related Articles
  1. Home & Auto

    How Much Money Do You Need to Live in San Francisco?

    Learn how much it costs to live in San Francisco and how the amount varies based on whether you are a student, a professional or an unemployed job-seeker.
  2. Budgeting

    How To Save Money When Moving

    Moving doesn't have to be as expensive as you think. Here are some great ways to save money on moving costs.
  3. Home & Auto

    5 Luxurious Ways to Boost Your Home's Resale Value

    Not all renovations are created equal. Here are five that are most likely to make a property appreciate (and be appreciated by househunters).
  4. Investing

    10 Ways to Effectively Save for the Future

    Savings is as crucial as ever, as we deal with life changes and our needs for the future. Here are some essential steps to get started, now.
  5. Personal Finance

    Choosing An In-Home Safe: Features To Look For

    What to look for in a box to protect your irreplaceable belongings.
  6. Investing Basics

    Investing $100 a Month in Stocks for 30 Years

    Find out how you could potentially earn hundreds of thousands of dollars by just investing $100 a month in stocks during your working years.
  7. Budgeting

    Key Questions to Ask Before Moving in Together

    Moving in together is a big step. Here are some key financial questions to ask your partner before you make the move.
  8. Savings

    Passing Down Values and Money to the Next Generation

    Amassing wealth to pass down to your kids is great unless your values don't come with it. A priceless gift is teaching them to be financially responsible.
  9. Home & Auto

    Top 5 Home Renos For Your Money

    Here are five renovations that return most of your investment when it’s time to sell your home.
  10. Budgeting

    How to Save Money on Your Disney Vacation

    Understand why Disney Parks are attractive vacation destinations and why they are expensive. Learn five money-saving tips for Disney vacations.
  1. How does the trust maker transfer funds into a revocable trust?

    Once a revocable trust is created, a trust maker transfers funds or property into the trust by including them in a list with ... Read Full Answer >>
  2. How is marginal propensity to save calculated?

    Marginal propensity to save is used in Keynesian macroeconomics to quantify the relationship between changes in income and ... Read Full Answer >>
  3. What is the importance of residual value in an automobile lease?

    The residual value of a car is often used by banks and auto dealerships to determine how much to charge per month for a lease. ... Read Full Answer >>
  4. Do mortgage escrow accounts earn interest?

    A bank is not required to pay interest on any escrow accounts (also mortgage impound accounts) it holds for its customers. ... Read Full Answer >>
  5. When is an expense ratio considered high and when is it considered low?

    A number of factors determine when an expense ratio is relatively high or low, but a good, low expense ratio is generally ... Read Full Answer >>
  6. What are the best ways to pay off my mortgage quickly?

    There are two main strategies for paying off a mortgage more quickly, which can be used alone or in tandem: making larger ... Read Full Answer >>

You May Also Like

Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!