Normally, people pay all their bills after their paycheck comes in. Then they pay for the fun stuff they want. This results in a low or negative savings rate across America.
You have nothing left over for yourself. You toil and strain to bring home a paycheck and then don’t keep any for yourself. To avoid this, these authors recommend you pay yourself first.
Namely, have 10% of every paycheck automatically, electronically sent to a separate account for the purposes of savings or investments. That is an easier and more reliable method.
At some point, I realized I needed to boost my savings and contribute to a taxable account. As my income grew and my student loans were paid off, I found it easy to divert more money into my taxable accounts.
Since I reinvested all investment income and had no debt after the first few years, saving became effortless. I never felt deprived. Looking back, I averaged a savings rate of about 38% of gross income and achieved FI.
You don’t have to spend time budgeting and making decisions all the time about how much to invest. It also helps protect from one of the biggest dangers: Lifestyle Creep.
Now that I have been FI for several years, my income has grown. My spending has not increased, so my gross savings rate has slowly creeped up over 40% without me doing anything differently.