All the modern gadgets and space conditioning in buildings consume lots of energy. Energy consumption can be optimized using Composite Insulation External Walls (CIEW) built from mortar plaster and structural and insulation layers. This study aimed to improve the overall performance of CIEW by optimizing the structural and insulation layer thickness. The objective was to minimize the Life Cycle Cost (LCC) and maximize the Life Cycle Savings (LCS) of CIEW. The nonlinear Least Squares Estimation (LSE) optimization technique for optimizing LCC and LCS of CIEW was used in the study. The study considered three insulation materials—Extruded Polystyrene (XPS), Rock Wool (RW), and Glass Wool (GW)—across three heat sources, including Circulating Fluidized Bed (CFB), Grate-Fired Boiler (GFB), and Air-Source Heat Pump (ASHP). The Life Cycle Cost Analysis (LCCA) methodology suggested by Huang using a traditional optimization technique was used as a basis for mathematical formulations and result comparison. The payback period of CIEW with optimal structural and insulation layer thickness was computed. The findings revealed that applying the LSE method enabled greater economic efficiency than the LCCA method, with an up to 9.12% increase in LCS value and an up to 7.41% decrease in LCC value. The research also revealed significant correlations between insulation and structural layer thicknesses and economic parameters.