When it comes to getting personal finances in order, feeling overwhelmed can be an understatement. There’s a lot to know, and endless opportunities competing for your interest and dollars. Meanwhile, life keeps happening and money comes and goes like the tide.

There’s good news: Financial freedom is attainable – but you must be willing to put in a little time and effort. We’re doing a five-part series to discuss the roadmap to financial freedom.

It can be helpful to visualize finances like a pyramid, with a foundation to build from, like Maslow’s Hierarchy of needs. (This is the first post in a 5 part series on the levels of Financial Freedom. You can read the others below):

The 5 Levels of Financial Freedom

Level One: Cash Flow and Budgeting

Level Two: Financial Security

Level Three: Accumulating Wealth

Level Four: Financial Freedom

Level Five: Legacy

Level One- the most important level in the hierarchy of financial needs, is cash flow and budgeting. This is the foundation you are building to support your financial future. If you are always juggling credit card balances or robbing Peter to pay Paul, your foundation is not going to be strong. Indeed, you can’t direct excess cash flow to level 2 needs until you have excess cash flow.

It’s important to write down (yes – not type) your income and expenses as you evaluate them. Countless studies prove that taking the pen to paper improves learning, goal formation, and progress.

Step One: Know What You Make –  Write down your take-home pay after taxes and deductions. Can you improve your income through a raise, more commissions, or tips? Oh- and make sure you’re getting all your benefits. A 401(k) match is free money that shouldn’t be left on the table.

Step Two: Track Your Spending – Most credit card companies, banks, and budgeting apps have free and easy to use reports/templates that summarize your spending. Use your spending summary(s) to categorize your expenses. You can download our fillable expense sheet at sweeneymichel.com or go old school and use pen and paper.

Step Three: Income vs Expenses – Here’s the most important step – subtract your monthly expenses from your monthly income. If your expenses are greater than your income, it’s time to edit your expenses. Evaluate spending which can be cut.