That rainy day that everyone's been told to save for isn't looking so theoretical anymore.

Constant talk of recession and bear markets has infected Americans with a decidedly conservative virus. Doomsayers who predict the strong likelihood of both occurrences are sensitive enough to hope that any recession would be short-lived and that the bear won't be too grisly.Yet sitting as we are smack-dab in the middle of an unpredictable period of Middle East unrest and on-and-off buyout bids, even worst-case scenarios don't seem entirely out of the question anymore. Adding tax hikes to this mix doesn't boost anyone's personal confidence level.

As I've given speeches to various groups this year, I've asked for a show of hands on where audience members think the economy is headed. Each week, the number of truly positive thinkers has been dwindling, with executives, planners and investors alike now offering a split decision between a mild, short recession and a longer, more painful one.

Bracing for the worst, this column lately has pointed out the importance of building cash reserves and cutting back debt. Specifically, tightening up on credit card balances and using only cards with lower interest rates is crucial.

But it's also time to give everything financial in your life a complete going-over to determine if it's in line with the current program. Not one cent should be overlooked, for you just might need it one day if the economy and financial markets do worsen.

For example, a family budget has never been more important than it is in 1990. To construct one, first list all your income sources, such as wages after deductions, in a basic family budget book. In this uncertain economy, don't include bonuses, profit-sharing payments or special dividends until you're absolutely sure they are a reality.

Write down all expenses, not just obvious ones such as mortgage and car payments, but all that can be traced through purchase receipts and charge account payments. Beyond the mortgage payment, largest expenses are usually food, transportation, medical costs and clothing. Incidentally, if you're able to save 10 percent of your gross salary, you're doing a commendable job. Keep it up.

Totaling your incoming and outgoing expenses results in a cash flow statement. The amount of your operating surplus in a year, say $5,000, indicates the growth of your net worth in that year. A negative income statement definitely isn't a good idea in a troubled economy.

Once you've figured your cash flow, use it to set priorities and outline a budget that adheres to what you feel you need to spend and also permits saving for the future. Determine which expenditures may be out of line and try to keep better track of your weaknesses. Monitor your budget weekly and go over the figures in depth every month. Be realistic, so the budget isn't simply tossed aside and forgotten.

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With priorities set in your budget, you can buy what you really need when you have the money, rather than impulsively buying items that you may not really need. These days, it's also important for everyone in a family to work together toward common financial goals. The "saver" personalities may have to rein in the "spender" personalities, painful as that may be.

In the case of a couple, it's a good idea to divide financial duties from time to time so that each has a shot at writing the checks and seeing what bills must be paid. Otherwise, it comes down to one person being characterized as the good guy, the other the bad guy. Try to understand each other's attitude toward spending and saving.

This is also a good time to figure the net worth of your family so you know exactly where you stand financially. This requires doing a personal net worth worksheet consisting of what you own, meaning assets such as cash, investments, home, car and possessions; and what is owed, such as bills for credit cards, loans and taxes. The difference that results when you subtract total liabilities from total assets is your net worth.

Finally, go over all investments with your financial consultant or broker to see whether you have enough liquidity for an emergency and whether your holdings are ones that you feel comfortable with. Any new investment should be scrutinized carefully in terms of risk.

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