Step 1: Watch an Overview Video

Step 2: Seal Areas Where Energy Escapes

Begin by sealing up areas where heating and cooling may be escaping. Weather strip around doors and windows and caulk gaps where wires and pipes enter your home. Check that your attic, walls and crawl spaces are insulated properly and that the insulation you're using meets the recommended R value for your climate.

Step 3: Improve Air Circulation

You can also improve how heating and cooling is circulated within your home by sealing leaks in air ducts, by changing your furnace filters regularly and by insulating any ducts that lead under the house or through any areas that aren't insulated.

Step 4: Use Energy-Efficient Applicances

Reducing your electric bills also can be as simple as replacing your current incandescent bulbs with more energy-efficient bulbs. They may cost more initially, but they'll save you in the long run. And when it comes time to replace your major appliances, be sure to look for the "energy star" label and compare annual operating costs.

You can lower the cost of heating water in your home as well. Wrapping your water heater, lowering the thermostat and insulating hot-water pipes can help keep you from pouring money down the drain. You can also reduce the amount of hot water you use in your home by replacing the current shower heads with low-flow, aerating models.