David Bach The Automatic Millionaire

Warmer weather is finally here, and so is your chance to take a much-needed vacation and reconnect with those you love. Unfortunately, high temperatures also mean high energy bills, and the Energy Information Administration predicts a 2.6 percent increase in electricity costs this summer.

Overall, the average household spends over $1,600 on fuel and electricity throughout the year. According to the U.S. Department of Energy, more than 50 percent of that is spent on cooling and heating our homes. And on top of that, the Environmental Protection Agency reports that we spend as much as $500 per year on water and sewer bills.

Seven Money- and Energy-Saving Tips

Fortunately, with a few changes you can slash your water and utility bills in half. Here's my checklist for saving a bundle this summer, while also making your home more environmentally friendly and energy efficient:

1. Get a home energy audit.

This whole-house checkup will uncover the trouble spots in your home, and identify which problems you should correct now in order to save the most money over time.

Call your local utility company to see if they offer a free home energy audit -- many do. If not, they'll likely be able to refer you to professionals who offer this service for a fee, which could range from $100 to $400 depending on where you live and how big your house is.

The investment is well worth it, because over time the inspection will pay for itself with the money you'll save on your energy bills. For some great tips on hiring an expert, visit the Department of Energy's web site. If you're the do-it-yourself type, read their tips on performing an audit on your own.

Once you've completed a comprehensive home energy audit, you're ready to start saving some serious cash.

2. Seal up air leaks.

Sealing air leaks and adding insulation to attics, basements, and crawlspaces is one of the cheapest and quickest energy improvements you can make to your home. A home energy audit is the best way to identify air leaks.

According to the Department of Energy, sealing air leaks will cut your utility bill by over 10 percent, so the average household will save $160 over the course of a year. Visit Energy Star's web site for some great tips on sealing and insulating.

3. Tune up your air conditioning.

Two-thirds of all U.S. homes have air conditioners, either as individual room units or as a central air system. It's estimated that air conditioning accounts for about 70 percent of summer energy costs.

Regardless of the type you use in your home, start the summer season by performing some simple maintenance. Simply by cleaning or replacing dirty air filters, the Consumer Energy Center estimates you'll save 2 percent -- or another $32 -- on your bill, and you'll prolong the life of your system as well.

If you use a room unit and it's more than 10 years old, it's time to upgrade to a new, energy-efficient model. According to Energy Star, you'll not only save an average of $25 a year on your electric bill, but you'll also be using 10 percent less energy.

Before purchasing your new unit, avoid the common mistake of buying one that's too large. Contrary to what most consumers believe, an oversized air conditioner can actually be less effective rather than providing better cooling. Energy Star can help you figure out the best size for your room.

If you have a central air conditioning system, the Alliance to Save Energy estimates that you'll save 10 percent a year -- or $160 -- if you use a programmable thermostat to raise the temperature when you're not at home.

4. Supplement air conditioning with an attic fan.

An attic fan controlled by a thermostat will lower the temperature of an entire house. Attic fans (also known as whole house fans) are relatively inexpensive at about $250, but when used in place of central air conditioning will lower your energy bill by a whopping 30 percent.

Buy and install an attic fan this summer and you could save about $230 the first year alone. The Department of Energy has more information.

5. Unplug appliances before you go on vacation.

Did you know that appliances that are off but still plugged in continue to use power? It's true, so before you leave for your summer vacation unplug everything that you can, including your computer, TV, stereo, washer, dryer -- even your cable box and cable modem.

Once you're back home, buy yourself several "smart" power strips for about $35 apiece. Eliminating "idle currents" will save you another 10 percent on your energy bill -- another $160!

6. Save with smart landscaping.

The outside area surrounding your home can really make a difference with the temperature indoors. Planting shade trees on the south, east, and west sides of your home will protect it from the hot summer sun.

According to the Alliance to Save Energy, smart landscaping could save you over $100 a year. Join the National Arbor Day Foundation for a $10 fee and you'll get 10 free shade trees that you can plant this summer.

7. Use water wisely.

According to the Environmental Protection Agency, the average American family of four uses 400 gallons of water each day. About 30 percent of that is for outdoor use, and more than half of that is for watering lawns and gardens. The rest is used to wash our cars and fill our swimming pools.

By being more aware of our water consumption and conservation, the EPA estimates we can save about $132 a year.

Start the summer by maintaining your sprinkler system. Look for leaks and replace cracked heads and valves. Irrigation systems with a rain shutoff device and a soil moisture device ensure you're not over-watering, which many people tend to do. Watering at night minimizes the evaporation that takes place in the heat of the midday sun.

Also, adjust your lawnmower setting for a height of two to three inches -- taller grass needs less water because the soil doesn't dry out as quickly. Finally, plant shrubs, trees, and flowers that are native to your local climate so they won't require as much water to keep alive.

If you're serious about conserving water both outside and inside your home, check out this water usage calculator to help figure out how much water and money you could potentially save.

Don't Forget Your Tax Credits

It's entirely possible to keep cool and comfortable this summer without having to worry about an outrageous energy bill. You'll feel great about doing the right thing for both the environment and your bank account.

Here's a nice extra incentive: The Energy Policy Act of 2005 provides tax credits to consumers who perform certain energy-efficient home improvements through Dec. 31, 2007. You don't want to miss out on these added savings, so find out if you qualify.

Have a great summer, and if you have a money-saving, "go green" tip that you'd like to share, take a moment to post a comment below.