Personal finance writing is full of the saying pay yourself first. This made sense to me theoretically since you need to save, to build wealth. However, from a practical sense I didn’t know what that meant: How exactly do I pay myself before I pay a bill?
After further inspection, I came to the conclusion that sticking to a budget is a way to pay yourself first. The idea of a budget is to set an upper limit, the most you will spend for a time period. The complement of the budget is the minimum saving you will accrue in that period. In this sense, the budget allows you to pay yourself, with the remainder.
Finally after deliberation and a moment of eureka, I came to the conclusion that you could rearrange your bank accounts so that the only cash flow inlet your expense account sees is the budget.
This flow ensures that you invest a minimum amount, which is the mathematical complement of the budget. This is a way to ensure that you pay yourself first, at least as I understand the statement.
My pay goes into a high interest savings account, which then gets separated into investing and an expense budget. With the investment income going to expenses, my flowchart has a Rich Dad, Poor Dad influence. The arrow doesn’t necessarily need to go there, depending on personal interests.
For setting budgets, my personal favorite book on the topic is Your Money or Your Life. I like that book because it provides a rational way to set up a budget and ensure that you are not over nor under, on spending. The method is subject to change, scale, and variation, not a one time recipe.