Money

30-year-old self-made millionaire shares the formula he uses to save big

Kyle Taylor knows a thing or two about saving money, having gone from broke to becoming a self-made millionaire in a matter of years.

In 2010, Taylor, like many millennials, was knee-deep in student debt and underemployed. To get out of his financial rut, he started a blog called The Penny Hoarder. The site is now a fully fledged company that offers financial tips to thousands of users.

The 30-year-old CEO and self-made millionaire tells CNBC that one formula in particular has helped him save.

The rule is useful for dealing with windfalls, like a large cash gift, a bonus or a raise.

It's called the "50/30/20 percent rule," Taylor says.

Kyle Taylor, founder and CEO of The Penny Hoarder
Kyle Taylor, founder and CEO of The Penny Hoarder

50 percent goes directly into the bank

The largest chunk of money should go into your checking account, emergency savings or a long-term savings account to pay for necessities, the CEO says.

30 percent goes towards funding your lifestyle

The next largest portion of these extra funds should go towards your lifestyle spending, perhaps buying new clothes or treating yourself to a nice dinner. It can also go to longer-term lifestyle goals, like saving for an apartment.

20 percent goes towards fun

You can spend this portion on whatever brings you joy, like exotic vacations or concerts.

"I think it's important to reward yourself in these windfall moments," Taylor tells CNBC. "You worked hard; you deserve it."

These percentages may differ depending on your age, your income and your financial goals, Taylor says. But following this rule has helped him on his financial journey from debt-ridden and frustrated to successful CEO.

"Having those percentages set up ahead of time will give you the freedom and the control to make sure you're making a wise financial decision," he says.

Check out a few fun ways Taylor recommends making extra money.

Video by Richard Washington.