That approach is usually advised when one begins to build a "nest egg", and is not that different from the one pursued in business books, like "Rich Dad, Poor Dad".

The point is to build predictable passive income stream on top of whatever else you're earning. Getting a general idea around predictable expenses will provide a "magic number" where your basics would be covered by passive income alone.

Some people might choose to forego active earning opportunities at that point, but it's hardly a requirement.