3. Decrease credit card debt
Take a hard look at how much you owe and come up with a realistic plan to reduce it. The first step is to identify and trim discretionary expenses, and then put that extra cash toward your credit card balances. You can also call lenders and request a lower interest rate. Remember, lowering your debt is one of the best ways to improve that credit score.
Fast Fix: Use cash or your debit card for everyday purchases. Keep only one credit card in your wallet for emergencies.
Watch Out: People often mistakenly pay the card with the highest balance first, says Stuart Ritter, a certified financial planner with T. Rowe Price Investment Services. But it's actually better to choose the one with the steepest interest rate.
4. Start an emergency fund
A rainy-day account provides security in case of unexpected financial hardship, such as job loss or large medical bills. It should allow you to continue to meet obligations without going into debt. Try to set aside enough to cover three to six months of expenses, says USAA's Walbert.
Fast Fix: Open a separate bank account for emergencies so you aren't tempted to dip into it for want-but-not-need purchases like a flat-screen TV.
Watch Out: Even if you can't set aside three to six months' worth of expenses, don't give up on the idea; try to contribute whatever you can on a recurring basis.
I have $100 extra a month—how should I allocate it?
Every situation is different, but as a general rule you should cover these three needs:
$35 to an emergency fund
$35 to debt reduction
$30 to a retirement account
Share your 2012 money resolutions at familycircle.com/resolutions.
Originally published in the January 2012 issue of Family Circle magazine.