Insulate a basement by gluing 3/4-inch extruded foam insulation to the walls. Avoid using expanded foam that is not as durable and provides a lower insulation R-value. Before beginning the project, make sure you resolve any moisture problems in the basement.
Manufacturers mark each sheet of extruded foam insulation with the insulation type. Cut the insulation by marking the measuring the piece, marking with a chalk line, and scoring the sheet with a utility knife. Once you score the sheet, snap it like drywall. Attach each sheet to the walls or framing using foam insulation adhesive. Apply the adhesive in an S-pattern and press the insulation in place, and then caulk any seams to prevent air infiltration.
If you choose to finish the basement, add 2x4 framing inside the existing walls. With the additional framing, you can add fiberglass insulation to improve the R-factor. The extruded foam insulation eliminates the need to add a moisture barrier when you add more insulation.
After adding the fiberglass insulation, finish the wall by adding wallboard. Most fire codes require finishing walls after insulation. The vapor barrier alone is not sufficient.
Insulating a basement is a cost-saving measure. As of 2015, the average homeowner saves between $280 and $390 per year by insulating the basement on a 1,500-square foot home.