I live in California and the winter has been a lot warmer than expected. I would like to decrease the water temperature in my home to try to save money and conserve energy. How do I do this?
There should (might actually) be a thermostat control on the water heater unit. Typically, in the US at least and on the units of which I've experienced, it's a big, round, red knob which will give you suggestions like "HOT", etc. Today's more efficient units may even have an "Energy Efficient" specific setting.
Adjust it to your liking.
Note that this may not be a feature on all models, particularly an electric heater; I know mine doesn't.
Most (virtually all) electric models have a non-obvious and inconvenient (but you don't usually need to adjust it that often) thermostat associated with each element. Since you need to expose the element electrical connections to see and adjust it, turn the power off first.
Repeat - turn off the power to the water heater before looking for or adjusting the element thermostats.
This is under the access covers that hide the connection to each element. As noted in the answer @Bmitch linked to, you should likely keep it set at 125F or above (not as shown here.)
You will probably get far more savings (what you really want) from adding insulation to the hot water pipes and posibly to the hot water heater itself (older ones are more poorly insulated than most newer ones,so they benefit more from additional insulation.) Uninsulated hot water pipes (and the cold water pipe feeding the hot water heater) waste considerably more energy than a few degrees on the hot water heater (since you will normally adjust the water temperature to suit, using less hot if the hot is hotter.) Lower temperatures will slightly reduce standby losses, but standby losses on a tolerably well insulated water heater are quite small, normally.