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The optimum thickness of insulation layers in cavity walls in buildings is determined under steady periodic conditions using the climatic data of Riyadh, Saudi Arabia. Different insulation materials are investigated at different locations in the cavity for a west-facing wall. The yearly cooling and heating transmission loads are calculated by an implicit finite-volume procedure that has been previously validated. These loads are used in an economic model based on the present worth analysis in order to minimize the total cost. Air spaces and insulation layers with different surface conditions and thickness are investigated and compared with the limiting cases with no air space or with no insulation. The results show that the most economical cavity configuration depends on the insulation material used. Under the conditions of the present study, polyurethane board and rock wool are found to be more cost effective when used alongside air spaces, while polystyrene is most cost effective when used with no air space. Among all configurations and insulation materials considered, a 9-cm-thick molded polystyrene layer with no air space is found to be the most economical. Thermal characteristics in the form of yearly transmission loads, and yearly averaged-dynamic R-value, time lag and decrement factor are presented versus insulation thickness.