Definition
A budgeting rule that routes savings and investments out of your paycheck automatically before any spending happens, treating wealth-building as the first bill of the month rather than whatever is left over.
Why it matters
Saving what remains after spending reliably fails, because spending expands to fill the space available. Automating transfers on payday removes the monthly willpower test entirely.
Example
On payday, $500 moves to a Roth IRA and $300 to a high-yield savings account before rent is even due. The checking balance then tells the truth about what is actually spendable.
Put it into practice
Related terms
This definition is educational, not financial, legal, or tax advice. U.S. rules and limits change; verify time-sensitive details with official sources. See our disclaimer.