Start with a clear picture of your money. First, list everything you bring in each month from every source. Next, track what you spend for a few weeks, including small purchases, and sort it into categories such as housing, food, and entertainment. Then list your bills and when each one is due, so you can see whether your paydays and due dates line up. Put it all together in a working budget, and update it whenever your income or spending changes.

It depends on your situation. A common guideline, and the one in LPL's The Basics of Budgeting guide on this page, is three to six months of living expenses. If your income is irregular or you are retired, you may want more. If that feels out of reach, start smaller: think about the unexpected costs you have had before, such as a car repair or a medical bill, and save toward that amount first. Even a small cushion can provide some financial security.

Somewhere safe, easy to reach, and separate enough that you will not be tempted to spend it. Many people use a dedicated savings account at a bank or credit union, which is generally considered one of the safest places for your money. Deposits at FDIC-insured banks are insured up to $250,000 per depositor, per bank, for each account ownership category. Because you may need this money on short notice, it helps to keep it where its value does not rise and fall with the markets.

Often it is not one or the other. Without any savings, one surprise expense can land on a credit card and add to what you owe, so many people build a small emergency cushion first while making at least the minimum payment on every debt. From there, extra money can go toward paying down high-interest debt, which costs you the most. The right balance depends on your interest rates, your income, and your goals.

Both have you keep making the minimum payment on every debt and put any extra money toward one debt at a time. The snowball method targets your smallest balance first, then rolls that payment into the next smallest, so you see progress quickly, although you may pay more interest overall. The avalanche method, which the Consumer Financial Protection Bureau calls the highest interest rate method, targets the debt with the highest interest rate first, which can save you money over time even if progress feels slower. Choose the one that fits how you stay motivated.

Your debt-to-income ratio, or DTI, is your total monthly debt payments divided by your gross monthly income, which is your pay before taxes and deductions. For example, $2,000 in monthly debt payments on $6,000 of gross monthly income is a DTI of 33 percent. Lenders use it to judge whether you can manage another payment, and different lenders and loan types set different limits. In general, a lower ratio leaves more room in your budget and more options when you borrow.

Pay every bill on time, since most credit scores treat payment history as the top factor; automatic payments or reminders can help. Keep your balances low compared with your credit limits. Experts often advise using no more than 30 percent of your available credit, and paying your cards in full each month helps your score and saves interest. Apply only for credit you need, because many applications in a short time can concern lenders. A longer history of on-time payments helps, so check your credit reports for errors and dispute any you find.

Use AnnualCreditReport.com, the only website authorized to fill orders for the free credit reports you are entitled to by law. The three nationwide credit bureaus, Equifax, Experian, and TransUnion, let you check your report from each of them for free once a week there. Be cautious of other sites that claim to offer free reports or scores, since some collect and misuse personal information.