Money

26-year-old who banked $100,000 shares the key to saving half your income

In 2013, business journalist Richard Meadows decided to calculate his net worth. It was a negative number — and a major wake-up call.

Meadows, 22 at the time, decided to buckle down. He started reading about the financial independence movement, made a series of small lifestyle tweaks and worked his way up to saving half his income. After about three years of living on less than he earned and investing the differences, he had $100,000 in the bank.

The journalist, now 26, handed in his notice at work, bought a one-way ticket to Bangkok and has been traveling and blogging ever since.

26-year-old Richard Meadows banked $100,000 in three years
Courtesy of Richard Meadows
26-year-old Richard Meadows banked $100,000 in three years

When asked about his top money-saving tip, "it's hard to narrow it down to any one particular thing," Meadows tells CNBC Make It.

Rather, the key is to start with a series of small changes: "If you say, 'Oh, I stopped drinking daily coffees, people sort of mock you and don't think it will achieve anything meaningful. But what people don't comprehend is that when you make a whole lot of small lifestyle changes at once, the cumulative effect is incredibly powerful.

"So maybe cutting out your daily coffee isn't going to do a whole lot, but what if you can find 10 or 15 equivalent ways to save that small amount of money? Suddenly, you've got this massive firehose of spare savings that didn't exist before."

These strategies could include packing your lunches to bring to work, carpooling or buying in bulk. For more ideas, check out Meadows' round up of 100 small ways to cut back.

If you want to save more than half your income, "it's more of a strategy of optimizing everything," says Meadows.

"Look at all of your outgoing and figure out, does this make me happy? Am I getting the best deal? Do I have the best provider for this? And slowly work towards the point where you're spending money on exactly the things that bring you the most happiness and absolutely nothing more than that."

Early retiree Chris Reining, who built a $1 million portfolio by age 35, has a similar perspective.

If you want to save big, start with small changes, he tells CNBC Make It: "I know there are some people out there that say you shouldn't worry about the $5 latte, but the more I think about it, cutting out the $5 latte was a good place to start. Because if you try to downsize your house, get rid of all yours cars and make all of these drastic changes, it's so overwhelming and you're not going to do any of it."

After cutting out his morning coffee, Reining eliminated the $15 lunches he bought every day. Next, he cut out the bigger things, such as the $1,000 a month he spent flying airplanes.

"The small changes will lead you to be able to make the big changes," Reining says. Plus, "you can always go back and add the small changes in later. Now I buy a $5 latte and it's no big deal, but I think it was really important to get the ball rolling by starting with something small."

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