Installing Low-Flow shower heads and faucet aerators is the single most effective water conservation savings you can do for your home.

Low-flow shower heads and faucet aerators can reduce your home water consumption as much as 50%, and reduce your energy cost of heating the water also by as much as 50%.  Equally as important, they are inexpensive and simple to install.  

Faucet: If an aerator is already installed on your faucet, it will have its rated flow imprinted on the side. This should read 2.75 gpm (gallons per minute) or lower so replace it if over 2.75gpm. If no aerator is installed, check to see if there are threads just inside the tip of the faucet. Most newer faucets are threaded to accept aerators.

Shower: Showers account for 22% of individual water use in North America, making this a great place to reduce water use and save money. Set a 2qt. saucepan on the floor of the shower and position it in the middle of the shower stream. With shower on full, count how many seconds it takes to fill the pan. If it takes fewer than 12 seconds, you could use a low-flow shower head. If you have a low-flow shower head installed, it should read 2.5 gpm or less.

 Source: Eartheasy.com