If your hot water heater tank feels warm to the touch, adding an insulating water heater blanket could save you up to 10 percent in water heating costs each year.

Step 1: Purchase a ready-made water heater blanket with an R-value of five or higher.

Step 2: With the vinyl side out, wrap the blanket around the hot water heater and use a Sharpie marker to mark the spot where the blanket overlaps. Once cut, the blanket should fit snuggly around the tank without too much overlap.

Step 3: Measure the height of the water tank and mark the blanket appropriately. For gas heaters, allow just a few inches of overlap along the top edge of the heater. Any more than this will create a hazard for the gas vent. With electric heaters, it is best to insulate the top of the heater, as well as the sides.

Step 4: Cut the blanket to size. When insulating an electric heater, cut the excess blanket material into 6-inch strips and use them to insulate the top of the tank. Position the strips across the tank top, avoiding supply lines and other obstructions. Use duct tape to secure the strips in place.

Step 5: Position the blanket around the water heater with the vinyl side out. Secure it in place with duct tape, both along the blanket seam and over the top edges of the tank.

Step 6: If the water heater has an overflow pipe and/or a pressure relief valve on the side of the tank, cut the blanket around these items and secure the edges with duct tape so the pipes and valves are unobstructed by the material.

Step 7: For electric hot water heaters, locate the access panel and the instruction plate. Use a utility knife to make diagonal cuts in the blanket material, forming an “X” atop both the panel and the plate. Fold the triangle shapes of insulation up and beneath the heater blanket to completely expose the areas.

Step 8: For gas hot water heaters, cut the blanket away from the combustion air vent and the thermostat. This can be done by making an “X” over the areas and folding the excess material up and under the insulating blanket. Leave an inch or two of space free around the combustion access panel to avoid any potential danger.