Editor’s Note: Julie Morgenstern is a New York Times bestselling author and professional organizer. Her fifth book, When Organizing Isn’t Enough: SHED Your Stuff, Change Your Life, arrived in bookstores in June.

In these times of extraordinary economic uncertainty, most people I know are focused on achieving a level of financial security that helps them get to sleep at night. After a decade of sloppy excess, the current situation is forcing us to adjust our priorities and get back to basics. Suddenly less is more, and frugality, not extravagance, is the new point of pride.

Sharp Relief

I’m not the only expert encouraging people to trim the fat and track their finances. But as a professional organizer, I know how intimidating and scary this challenge can be. In my line of work, messy paperwork is the No. 1 challenge I encounter. So many of us don’t have a good enough handle on what’s happening with our accounts. In fact, money is such an emotional issue, charged with guilt, fear, status, security and power that many prefer not to know. Better to live in the fog than in reality’s sharp relief.

But getting an unambiguous view of your finances is essential to survival. This economic downturn can be an opportunity to conquer bad habits and develop critical skills that will help you ride out these tough times and be a smarter money manager in the future.

There are three basics steps to taking control of your finances: You have to know what you own, know what you spend and streamline your bank accounts.

Step 1: Know what you own

The first step is always the toughest, but it’s also essential to clearing the fog. Start by completing this inventory [click here] to access the Vital Documents Map of all your bank accounts, investment accounts and credit cards, and the contacts associated with each account. The information doesn’t need to be perfect — a down and dirty snapshot will do.

Once you’ve inventoried your accounts, sum the value of your tangible assets: money in each checking and investment account, your retirement savings, etc. Also include electronics, furniture, art and jewelry (in the event you need to liquidate those items to free up additional capital). Then sum intangible assets, including your skill set and experience. Marketable skills absolutely have a dollar value – think of all your years in school, tuition costs and time spent building professional relationships. Reflection on this point ahead of time will help you recognize new opportunities and move quickly to replace or supplement your income.

Finally, calculate your anticipated monthly income, based on your salary, social security, pension, dividends and any other regular source of earnings. Use this sheet [click here] to get started, and plan to fill it in once a month.

Step 2: Know what you spend

People have different methods of categorizing spending; my preference is “mandatory” and “discretionary.” Mandatory expenses include bills and expenses that are nonnegotiable and essential to maintaining a basic quality of life. For most this would include the mortgage or rent, heat, electricity, groceries, gas and phone. These are the things you pay for first, and in a worst-case scenario, you’ll need to at least be able to cover these expenses.

Discretionary expenses include items and services, that if necessary, you could really do without. This might include clothing, restaurant meals, entertainment and grooming. Discretionary expenses can be trickier to calculate because you’re likely to pay for these items in different ways – sometimes a check, sometimes your debit card, sometimes a credit card, sometimes cash.

Only you can determine what’s “mandatory” and what’s “discretionary”; there are no hard and fast rules here. For example, dry-cleaning service and regular manicures and pedicures might seem like luxury expenses to some, but are near job requirements for others. Figure out what’s right for you. If you need to trim your spending, start with the obvious, easy places, and then advance to the less obvious ones. Use this document [click here] to track mandatory and discretionary expenses.