When José and Tina Medel decided to remodel their two-family home in Jersey City, NJ, they debated dozens of paint swatches, disagreed over the kitchen fixtures and were torn about building the addition that would allow each of their two daughters to have her own bathroom.

What they didn’t argue about was going green. “We were tearing the house down to the studs, so we knew we wanted to install things like radiant floor heating and upgrade as much as possible to solar power,” says Tina, the president of an insurance claims company. “We knew it would bring down our energy bills. But it was also important for our kids. We both worry about the state of the earth and the problems our children stand to inherit.”

As more and more parents consider the role they can play in conservation—and in lowering their skyrocketing energy bills—they’re finding that eco-changes are a smart choice for their kids, their budget and their conscience. Not everyone can make huge overhauls like the medels, but there are plenty of easy, cost-effective ways to lower your bills significantly, whether you decide to weather-strip your windows or invest in a new solar water heater.

But where to start? And where are the biggest savings? The best energy-saving approach begins with your home’s shell, according to the U.S. Green Building Council. Start with windows and doors; then move to systems, like heating and cooling; finally, consider renewable-energy upgrades if you can swing the initial cost, which is easier with generous tax breaks.

Whether you can afford to go all in with a hefty investment or are looking for a more conservative fix, here are some smart ways to spend your cash on energy effciency.

Small Job
Give Your Heater a Jacket
Wrap your water heater in an insulating jacket to reduce heat loss through the tank’s walls by 25 to 40 percent, saving you about 4 to 9 percent on your water-heating bills. The jacket will cost only about $10, so the investment is quite small.

Very Big Job
Embrace Clean Energy
The energy savings of renewable, off-the-grid power can’t be beat. By installing solar, wind and geothermal energy systems (hint: start saving for these now), you can make a big investment in the future. The environmental benefits are large, but the costs take more time to recover.

Tax bonus: You have until December 2016 to earn a tax break on these improvements. You can save up to 30 percent of the costs (with no limits) with this generous tax credit.

Big Job
Install New Windows and Doors
About one third of your home’s total heat loss goes out the window (literally), according to the American Council for an Energy-Efficient Economy (ACEEE). But whether or not it’s cost-effective to replace them depends on where you live. “If you have single-pane windows and live in a hot or cold climate, like Arizona or New York, it’s definitely worth the investment,” says eric corey Freed, green architect and co-author of Green Sense for the Home: Rating the Real Payoff from 50 Green Home Projects. Doublepane, Energy Star–rated models cost only about $15 more per window than standard models, and both energy-efficient windows and doors can reduce your energy bills by 15 percent.

2010 tax bonus: If you made the investment before the end of December 2010, you can score a tax credit of 30 percent of the cost, up to $1,500.

Small Job
Block Drafts with Weather Stripping
If you don’t have the money (or the time) to replace all the windows and doors, look at inexpensive weather stripping or caulking to boost your home’s heat efficiency by 5 to 30 percent.

It’s an easy DiY project: apply the strips or caulk to the perimeter of the door or the moving parts of the window to keep cold air out in winter and cold air in come summer. “This is something you can do in an afternoon, and you’ll notice an improvement immediately,” says Freed.

Big Job
Upgrade Your HVAC System or Insulate
As much as half of the energy used in your home goes toward heating and cooling it, according to the U.S. Department of Energy. If you suspect your heating, ventilating and air-conditioning (HVAC) system is on the fritz, first have a technician give it a tune-up. “It’s really important to have your HVAC system inspected and cleaned on an annual basis,” says do-it-yourself expert Lou Manfredini. if your system is more than 15 years old, consider swapping it for a newer Energy Star–rated model, which can cut your annual energy bill by up to $200, depending on where you live.

Before you invest in a new HVAC system, however, make sure you’ve blocked big air leaks in your home, which may be the real culprit. Target unfinished attics, basements and crawl spaces with high-quality insulation (level R-38 or higher). “Insulation is like chocolate,” says Freed, “the more you have, the better.” You can save up to $250 per year on your energy bill and improve the efficiency of your system. “The cost of a new HVAC system may be so prohibitive—around $7,000—that it’s best to work on its efficiency first,” adds Freed.

2010 tax bonus: if you did replace the system and did it before the end of December 2010, as with windows and doors, you can receive a tax credit of 30 percent of the cost, up to $1,500.

Small Job
Install a Programmable Thermostat
In your rush to get out the door and on your way to work, it’s easy to forget to turn off your heat. Let a programmable thermostat remember for you. These are easy to install and will automatically change the temperature settings when you’re away from home and at night. “First thing I tell people to do is replace their thermostat with a programmable one—and use it,” says Freed. The cost? Only about $20. But the savings can average up to $180 every year.

Big Job
Invest in a Water Heater (Nonsolar)
After heating and cooling, water heating—which accounts for about 25 percent of the overall utility bill—is typically your biggest energy waster. The first and easiest thing you can do to offset that cost is to turn down the temperature. “The water heater should be around 123 degrees—123 is the magic number because that’s the number that kills off bacteria,” says Freed. However, if you have an electric water heater, replace it pronto. By switching to a more efficient gas model, you will save 50 percent on your energy bill from day one. If you own a gas water heater that’s more than 12 years old, consider replacing it with a model that has an Energy Factor (EF) of 0.62 or higher. Manfredini also recommends tankless water heaters, which heat water only when you need it and last longer than standard ones.

2010 tax bonus: if you were clever enough to have installed a more efficient water heater before the end of December 2010, you can pocket 30 percent of the cost, up to $1,500.

Money-Savings Tip
A home energy auditor can pinpoint where your home is wasting energy and assess which fixes will have the most cost-saving rewards. An auditor will run you about $250 to $600 per visit, but you’ll often see cash returns the first year, post repairs. Also, ask your utility company if free or low-cost audits are available.

Is Solar for You?
Installing solar panels requires a big up-front investment—ROI is seven to 12 years, says Freed. And if you’re considering a solar water heater, you have to factor in where you live, your roof space and how many people live in your home. But you can save 50 to 75 percent on your water-heating bill over the long term. Bonus: You stand to gain cleaner air. And that’s, well, priceless.