
If you're not already aware of your household's water use, you will be soon. Almost four in five states anticipate water shortages by 2013, which could lead to steeper rates and penalties for excessive use. When it comes to showering and washing dishes and clothes, you're also paying to heat the water.
It's the fastest way to conserve, saving the average household about $70 a year. Next, upgrade to water-efficient fixtures. Low-flow showerheads can save as much as $265 per year on water bills. "A $30 showerhead can save more money than $3,000 worth of solar panels," says Charlie Szoradi, of Green and Save, a company based in Devon, Pa., that analyzes the payback of energy-efficiency projects. Switching to a low-flow toilet, which uses 1.28 gallons per flush compared with the 3.5 to 5 gallons of a 15-year-old or older model, can save $90. Also check for utility rebates.
Lower the temperature to 120° F and insulate your hot-water pipes. If your unit is more than a decade old, do your research now. That way you'll get a new unit that has a long warranty and is sized appropriately, not whatever's on the truck of the only plumber who calls you back when your old heater breaks.
Insulate your water heater. Don't prerinse dishes before loading them into the dishwasher. Add an aerator to faucets.

Kohler’s Cimarron K-3609 toilet, $300, excelled in our solid and liquid tests and used 1.28 gallons per flush.
Our testers described the watersaving American Standard FlowWise Dual Function 1660.717 showerhead, $50, as refreshing and stimulating. The Moen Inspire 21777, also $50, used slightly more water but has more settings.