by Jason Abendroth

Created on: August 19, 2009

Especially in these economic times, many people are finding themselves in very challenging financial situations. For the thousands of newly unemployed, finding a new job is suddenly vastly more difficult than it used to be. Still others are fortunate enough to remain employed but have had their hours, and hence their paychecks, reduced. For those that remain employed full-time, but would like to earn some extra cash for themselves, the options are extremely limited.

With far fewer opportunities to generate replacement or extra income, people are turning to the only other option to relieve their financial pressure, namely cutting expenses. Depending upon the severity of the situation, simply eliminating that daily coffee beverage and eating out less might suffice. Others might find that this doesn't come close to meeting their needs due to the radical changes that have taken place in their lives.

The first step toward becoming solvent again is to get organized. Businesses utilize financial statements least of all to satisfy regulators, the IRS and stockholders. The far more important objective of these valuable statements is to provide businesses with the ability to gauge their financial performance, health and ability to pay their bills. Ultimately these statements provide a method for savvy businesses to maximize their efficiencies in revenue generation and expense control.

So if businesses have such incredibly useful tools, why can't individuals have them too? It turns out that we not only can, but indeed we should. Everyone can benefit, especially those whose finances are in dire need of intervention. While the complexity of business financial statements would be overkill for the average individual, the premise is sound.

To begin, detailed information is paramount. Living more economically by reducing your expenses is only possible if you know exactly what your expenses are. So you will want to start by tracking your daily expenses and logging them into your favorite spreadsheet program. Adjacent to the expense column should be the column for revenue or income. Having them side-by-side for instant comparison is very important.

Once you have an entire month's worth of expenses, and perhaps much sooner than that, you will start deriving value from the statement by seeing where all of your money is going. For many of us, seeing where we spend all of our hard-earned money can be shocking. This is exactly the point of the statement - to

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