An economizer system and method for saving heat and water, comprising a bathing facility for receiving hot water from a water heater through a pipeline; a first valve for controlling the flow of hot water received by the bathing facility; a second valve for allowing the flow of an initial volume of cold water existing in the pipeline between the water heater and the bathing facility 1 through a filling line; and a holding tank for collecting the initial volume of cold water flowing from the filling line before the hot water is delivered to the bathing facility.