One important factor to saving is understanding your income source(s).  One way to understand your income is to review pay stubs and earning statements then terms such as gross income, net income, pre-tax deductions, federal withholding tax, state withholding tax, social security tax, and other taxes.  These terms help understand your tax refund or tax liability and the difference between forms W-2 and 1099-MISC.

• Gross income is total personal income before deductions and exclusions.  GI can be computed by multiplying your hourly wage by the number of hours worked in a pay period.  For example, $12 per hr. times 40 hrs. equals $480 of gross income for one week; multiplied by 80 work hrs. equals $960 of gross income for a two week period.
• Net income is gross income less pre-tax deductions and other expenses.  For example, $960 of gross income for a two week period less federal income taxes, state taxes, social security taxes, and contribution to a retirement account and/or health savings account could result in net income of $680.
• Pre-tax deductions such as retirement contributions, health savings accounts, and dependent care accounts are a way to set aside money for future expenses.  When reviewing your earnings statement, note how gross income, net income, and federal withholding tax change based on the amount of your pre-tax deductions.  Setting money aside for these deductions reduces your annual income taxes.

Other Tabs in under the Savings tab gives additional explanation and examples of how savings can be achieved using your bi-weekly payroll.  These savings methods, when combined with other savings methods such as interest savings on car loans and mortgage loans, are a way to build savings annually then use the money to invest.