A water heater blanket may be a better choice.
If energy savings is your goal, a water heater blanket may be a better choice over installing a timer. Both reduce the amount of standby loss (the energy used to keep the water in the tank hot when hot water is not being used). A timer turns the water heater off, preventing it from adding heat when the hot water is not needed. A water heater blanket prevents the heat from escaping. A blanket is less expensive, easier to install and does not restrict when the water heater can be used.
If you have a newer water heater, there is a good chance the tank has high R-value insulation (indicates insulation's resistance to heat flow) already which is helping to reduce standby heat loss. If you don't know the R-value, touch the tank. A tank that is warm to the touch needs additional insulation which can be provided by installing a pre-cut jacket or blankets which are available from around $10 - $20. Be sure to read and follow the directions carefully. Focus on Energy offers the following tips to help save on water heating costs:
- Insulate the tank and hot water pipes
- Set the water heater temperature at 125 degrees F
- Fix leaks
- Install low-flow fixtures (showerheads, kitchen & faucet aerators)
- Wash clothes in cold water
- Consider replacing an electric water heater with a power vent natural gas water heater with an energy factor of .64 or greater