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Are you pouring money down the drain every time you turn on the hot water? Reduce your utility bills by  increasing your water heater's efficiency and reducing the amount of hot water you use. In most homes, heating water consumes as much energy as lighting. Here are four basic things you can do to save energy and money.

By replacing old showerheads with new water-saving designs you can save energy without shortening your shower. Low-flow showerhead models use an average of 2.5 gallons per minute compared to the 5 to 7 gallons used by a conventional showerhead.

Install a low-flow aerator on your kitchen faucet. Most aerators include spray settings that making washing easier and more efficient.

Don't turn the hot water knob on your faucet unless you actually want hot water.  If you turn it on to wash your hands but your system is slow in getting the hot water to the faucet, then you have just wasted money to heat your pipes.

Set your water heater to 120 degrees. That should provide most households with enough warm water for showering and washing. If you live alone, you can set it lower -- each 10 degree reduction in water temperature can save between 3 and 5 percent of your water heating costs. When you are going away on vacation, turn the thermostat down to the lowest possible setting.

Insulating your hot water pipes will keep water hot as it flows through the pipes to your faucet and the water will stay warmer in the pipes. Even when pipes are insulated, the water in the pipes will cool but by staying warmer longer it'll save energy and water. It's easy to insulate the first 6 to10 feet of hot water supply pipe from the water heater. Pipe insulation is available at any hardware store.

An easy do-it-yourself project that should offer an immediate payoff in lower bills is to insulate your water heater. Particularly if your heater is in an unheated part of the house, a fitted water heater blanket can pay for itself quickly.