The location of your thermostat can affect its performance and efficiency. Read the manufacturer's installation instructions to prevent "ghost readings" or unnecessary furnace or air conditioner cycling. Place thermostats away from direct sunlight, drafts, doorways, skylights, and windows. Also make sure your thermostat is conveniently located for programming.

You can easily save energy in the winter by setting the thermostat to 68°F (20°C) when you're at home and awake, and lowering it when you're asleep or away. This strategy is effective and inexpensive if you are willing to adjust the thermostat by hand and wake up in a chilly house.

In the summer, you can follow the same strategy with central air conditioning, too, by keeping your house warmer than normal when you are away, and lowering the thermostat setting to 78°F (26°C) only when you are at home and need cooling.

A common misconception associated with thermostats is that a furnace works harder than normal to warm the space back to a comfortable temperature after the thermostat has been set back, resulting in little or no savings. This misconception has been dispelled by years of research and numerous studies.

The fuel required to reheat a building to a comfortable temperature is roughly equal to the fuel saved as the building drops to the lower temperature. You save fuel between the time that the temperature stabilizes at the lower level and the next time heat is needed. So, the longer your house remains at the lower temperature, the more energy you save.

Another misconception is that the higher you raise a thermostat, the more heat the furnace will put out, or that the house will warm up faster if the thermostat is raised higher. Furnaces put out the same amount of heat no matter how high the thermostat is set—the variable is how long it must stay on to reach the set temperature.

In the winter, significant savings can be obtained by manually or automatically reducing your thermostat's temperature setting for as little as four hours per day. These savings can be attributed to a building's heat loss in the winter, which depends greatly on the difference between the inside and outside temperatures. For example, if you set the temperature back on your thermostat for an entire night, your energy savings will be substantial.

By turning your thermostat back 10° to 15° for 8 hours, you can save about 5% to 15% a year on your heating bill -- a savings of as much as 1% for each degree if the setback period is eight hours long. The percentage of savings from setback is greater for buildings in milder climates than for those in more severe climates. In the summer, you can achieve similar savings by keeping the indoor temperature a bit higher when you're away than you do when you're at home.

However, there is a certain amount of inconvenience that results from manually controlling the temperature on your thermostat. This includes waking up in a cooler than normal house in the winter and possibly forgetting to adjust the thermostat (during any season) when you leave the house or go to bed.

Automatic and programmable thermostats can eliminate this type of inconvenience.