The first step to financial freedom is to understand money.

Money manifests in different forms, including your paycheck. Common paycheck elements are:

• Gross Pay – what you make hourly or annually.
• Deductions – amounts subtracted for taxes, garnishments, direct deposits, or employment benefits. 
• Net Pay – how much pay you get after deductions. 

As soon as your "net" paycheck hits your bank account, the cycle of deposits and spending beings. 

Every swipe of your debit card at a store, every check written for a bill, and every ATM withdrawal generate dozens of bank transactions that appear in your bank statement. 

This constant swirl of deposits and spending into and out of bank accounts is called cash flow.

A balance sheet helps you visualize and measure your cash flow within a specified period of time including:

• Incoming Money – how much money comes in.
• Outgoing Money – how much money goes out.
• The Balance – how much money is left over.

Negative balances mean you are spending more money than you make and may signal financial trouble.