The most important part of reading the Bible is making sure you understand the literal sense of the text. This can mean knowing the vocabulary, understanding the literary form of the text, investigating the original language used, or unpacking the symbolism of a parable. For example, when Jesus says “I am the vine, you are the branches” (John 15:5), you have to know he is referring to himself being the main shoot of a grapevine and his disciples being the offshoots, and not to himself being a vine clinging to the branches of a tree. When God appears to Abram as “a smoking brazier and a flaming torch” (Genesis 15:17, NAB), you need to know that a brazier is a small, portable metal pot for holding smoking coals, and not a bra (brassiere)!
Once the literal sense of the text is understood, there are three spiritual senses that can be discovered. The first spiritual sense is the allegorical sense, by which we understand the events recorded in the Bible by recognizing how they point to Christ. The story of the Israelites and their exodus from Egypt can be interpreted allegorically as the salvation of a sinner from sin, with the crossing of the Red Sea symbolizing baptism.
The second spiritual sense is the moral sense, which teaches us how Christ desires his disciples to act. Some parts of Scripture are very clearly moral teachings, such as when Jesus tells his disciples to turn the other cheek to one who strikes them (Matthew 5:39). In other places the moral meaning must be uncovered. In the parable of Jesus where a widow begs a judge day after day to hear her case, the moral teaching is that Christians should persevere in prayer.
The third spiritual sense is the anagogical sense, which reveals the eternal significance of events and realities recorded in the Bible; that is, it relates the events to death, the final judgment, hell, and heaven. This sense is very apparent in the parables of Jesus that involve the judgment at the end of time, like the separation of the sheep and the goats (Matthew 25:31-46).
(See Catechism 115-119)