Anytime we look at cutting expenses, we're actually talking about shifting your resources from one area to another in an effort to spend less on something that gives you less satisfaction to something that will give you more. In this post, we'll look at a simple way to save money on energy so you can take the savings and put it someplace that will serve you better. Let's face it. Energy is necessary to an extent, but we'd all rather spend it on vacation instead.
Home Energy Audit
The fastest and surest way to save money on energy is to conduct a home energy audit. While you might think this would require some sort of expertise, it doesn't. In addition, many gas and electric companies offer free home energy audits on their websites with a few even giving you some energy saving products for taking the time to do one (like energy-savings CFL bulbs).
The purpose of an energy audit is to see how you're using energy and find ways to reduce your usage. There are many variable that include the type, size, and age of your home, what type of lighting and electronics you use as well as the energy efficiency of your appliances and heating and air conditioning. Regardless of your particular setup, the energy audit will find ways to help you reduce your energy consumption which will, in turn, save you money.
To find out if your energy company offers a free audit, go to Google and type in the name of your energy company followed by the words 'home energy audit' as shown above for Duke Energy. The search results should show your company's home energy audit link on the first page. When you see it, click through and start your online audit which should take between 5 and 15 minutes to complete. If you can't find it, you can go to your company's website or use the one provided by the government detailed in the next paragraph.
From the U.S. Department of Energy
The DOE has a similar setup to what you'll see at an energy company's website. One of the things that we like about this audit tool is the recommendations list the estimated payback time for any investment you'll need to make and ranks them accordingly. It's a simple three page form, and you'll need to click on the 'Upgrade' tab and then click 'Recommendations' when you're finished to get the details. Click here to use the DOE home energy audit tool.
How Much Will You Save?
The simple answer is 'it depends'. When you look through the recommendations, you will see some very inexpensive or even free ways to reduce your energy consumption that will generally lead to a savings of 5% to 10% of your annual energy expenses. However, to maximize your savings, you will often need to make some type of cash investment in upgrading appliances or making other improvements to your home. This will be up to you as to how much you're willing to invest to save money on energy.
What we advocate is that you take all of the 'cheap steps' to reduce your energy usage like fiddling with the thermostat, installing CFLs, turning the lights off, and generally being more aware of your energy waste. The more significant investments generally pay for themselves over time, but we always recommend paying cash for these improvements as interest on loans (even tax deductible ones) can significantly increase the payback period and add risk to your financial life. Either way, do the little things first and then move up to the larger ones.