The issue of global warming has become an imperative concern to the world. Many researchers attach great importance on renewable energy issues. In conjunction with Taiwan’s government policy about saving energy and reducing carbon emission, a Smart Energy Management Device (SEMD) is proposed in this study. The intention of the SEMD design is to fulfill the energy demands of household appliances. Inspired from heat pump technology, the SEMD is designed not only to provide heat energy but also cold energy for household appliances. In this system, heat and cold energy recovery subsystems are constructed simultaneously to reduce the loss of energy. The focus of this study is to investigate and optimize the performance of the SEMD system in order to minimize the power consumption and achieve minimum operating costs. To this end, heat energy equations of the system are derived and Particle Swarm Optimization (PSO) is applied to find an optimal operating control strategy for the system. The minimum life cycle cost of the system can be achieved accordingly. It is found through numerical examples and demonstration, the most decent design of water storage and system capacity for the SEMD is 1000 L and 10 kW respectively. The life cycle cost after applying the control strategy based on PSO can save 28.82% in comparison with the ordinary control strategy. This research can improve the overall economic efficiency of the SEMD system and provide a reference point for manufacturers to create new solutions in the field of heat pump systems engineering.