Your water heater can be a big part of your energy bill, 14-25% according to the U.S. Department of Energy. Making it more efficient can be a big help.
There are several ways you can save money on heating water for your home, such as turning down the thermostat on your water heater to no more than 120 degrees F. But insulating it is another great step.
You can buy a water heater blanket for under $20 on Amazon, although they can run more as well. Home Depot and other home improvement stores often carry them as well. You have to be sure not to cover the thermostat when you cover it. They are made of fiberglass in many cases, so you will need gloves to protect your hands as you install it.
The water heater blanket will help to cut down on the heat loss on your water heater. This is particularly nice first thing in the morning if your water isn’t always hot right away.