Set up 4 to 6 passwords:

one for all the low-security sites,

another for any site that has your credit card number,

another for social networking,

another for email,

another for work,

and the most secure for your banking sites. Sleep better.

Keep them on a piece of paper somewhere safe like your wallet.

These rules are not always possible, but they help reduce the numbers of passwords while staying fairly secure.

It can be difficult to remember every sites that you used if you decide to update your passwords, but what I do is keep the latest two versions of my passwords handy.

via Observations: How to Know if Hackers Have Stolen Your Password.