How to Save $100,000 by Age 25

Every morning I roll out of bed and ask myself, ‘What should I do today?’

As I write this sentence, I’m looking out over a beautiful beach on an island off the coast of Cambodia. I don’t have a proper job, but my bank balance recently hit six figures.

Laptop on a balcony overlooking the shores of Koh Rong Samloem
Obligatory ‘view from the office this morning’ photo. So much serenity.

I won’t lie. These factors may have contributed to my general enthusiasm about life. But there’s another reason I sometimes stare into space and smile at nothing (even if anyone in the vicinity thinks I’m a crazy person).

For the first time in my life, I have absolute freedom to only pursue the things that interest me. The last two decades have been an uninterrupted freight train of schooling and work, so it’s a pretty surreal feeling. There are moments of pure elation, and even the occasional faint trace of guilt. Did I cheat, somehow? Surely it can’t be this easy? I’m waiting for a giant skyhook to descend from the heavens and hoist me up by the seat of my elephant pants, violently jerking me back into reality.

It wasn’t until 2013 that I even twigged this was an option. I’d been working as a business journalist for a couple of years, and one of my responsibilities was researching and writing personal finance features.

I’d chosen the topic of ‘net worth’, which is defined as everything you own, minus everything you owe. Naturally I was curious what my own net worth was, so I did the math.

It was a negative number. My savings and other assets were completely wiped out by my debts – and then some. Finding out you’re worse off now than when you first entered the world as a naked, screaming, hairless maggot is kind of depressing.

 

The author as an infant.
This little idiot enjoyed eating dirt and pooed himself daily, but he was still more of a baller than me.

It wasn’t much consolation knowing most twenty-somethings were in the same boat, especially those with student loans. Unlike them, I made my living lecturing people on how to be good with money. The first penny dropped: It was time to shift up a gear.

Around this time I’d also started learning about the ‘early retirement’ and ‘financial independence’ movements. It turned out there were cadres of rebels around the world who flat-out rejected consumerism. They laughed mightily at the thought of 40 years of wage slavery, and retired decades earlier than everyone else.

interviewed one of the rebel movement’s unofficial leaders, Pete Adeney, who saved enough cash to quit work at age 30 so he and his wife could spend more time with their boy.

Another penny dropped. The money habits of Pete and his peers were some next level shit. Conventional personal finance “wisdom”, like the stuff I’d been dishing out, was that you should aim to save 10 per cent of your after-tax income. These guys saved half their pay, or more – and they did it in style.

How to Win the Jackpot

The more I read, the more pennies dropped. Soon they were gushing out like I’d won the jackpot, albeit on the cheapest slot machine in Vegas.

This is the bit where I’m meant to plug my guide to red-hot growth stocks, or sign you up to some scammy forex trading course.

 

Jeremy, drinking whiskey in the bath: “It’s not pyramid selling, its network marketing and it’s a guaranteed money maker Mark! I’ve seen the, the charts!”

 

Sorry to disappoint, but there is no magical way of getting rich. While we’re crushing dreams, Santa’s not real, and Margot Robbie doesn’t even know you exist.

The true ‘secret’ is simple: Live on less than you earn. Save and invest the difference, and let compound interest do its thing.

I understand if you’re underwhelmed. Most people already know this, at least on some level. It wasn’t until I saw what happens when it’s put into practice that it really blew my socks off.

Geeking out with Spreadsheets

“What gets measured, gets done.”

— Unknown

Slowly but surely, I reassessed every area of spending. I cut the bloat and wastage. I thought about what was really important to me, and what wasn’t.

Things really started humming along after I customised a spreadsheet to track my net worth. Every month I got a little buzz out of seeing the number climb higher and higher. I could also tell if progress was slowing, and give myself a metaphorical kick in the butt as required.

(Be sure to check out ‘Net Worth Tracking: The Number One Tool For Real Financial Success‘ to learn more, and grab yourself a free copy of my spreadsheet.)

Journalism is not known for its lucrative salaries, and I wasn’t exactly earning megabucks. Nevertheless, a shitload of savings poured into my bank account. I needed somewhere to put it, so I started dabbling with investing. After a few initial bumps and scrapes, I figured things out and ended up doing pretty well.

My net worth kept growing, into the tens of thousands. Along the way, this happened:

Letter from the tax department: Dear Master Meadows, congratulations! You've paid off your student loan.
That’s right, Master Meadows. This letter is even cooler if you read it in Michael Caine’s voice.

In early 2015 I started fantasising about taking an extended break from the 9 to 5, or abandoning it altogether.

I loved my job, especially back when the news industry wasn’t as far down the death spiral. But my feet were itching like crazy. I’d been in the same gig for more than four years. I was losing my mojo. All sorts of personal projects were swirling around my head, but there was no time to make them happen.

So I made a promise to myself: Once my net worth hit NZ$100,000, I’d quit my job, sell everything I owned, and move overseas.

One year later, I was into the ninety thousands. I bought a one-way ticket to Bangkok and handed in my notice at work. I was walking on air by this point, and probably could have saved myself a fare by floating across the Pacific.

When the time came to board my flight, the $100,000 target was still frustratingly just out of reach. A dumb investing mistake had finally caught up with me, setting me back a couple of months. I was mildly disappointed, but too excited about starting my adventure to dwell on it.

On August 1 2016, I was sitting in a KFC in Phnom Penh, mildly hungover. As the good Colonel’s deep-fried gift to the world worked its restorative magic on my gut, I took advantage of the free WiFi to do my monthly net worth update.

The spreadsheet spat out the number $101,227, and I spat out a mouthful of Zinger burger. Halle-fuckin’-lujah! In three-and-a-half years, I’d gone from being penniless to having a net worth of six figures. I stuffed the rest of the burger in my mouth, and relished the taste of grease, mayonnaise and victory.

(Note: My savings goal was in New Zealand pesos, the currency of my home country. To reach six figures as denominated in the mighty greenback, it took me until the ripe old age of 26.)

What Do You Want?

“A man’s worth is no greater than his ambitions.”

— Marcus Aurelius

$100,000 is a nice round number, but it’s also completely arbitrary. I only chose it because it would comfortably give me enough cash to achieve my actual, underlying goals.

Believe it or not, my aim wasn’t just to lie on a beach drinking cocktails every day and posting obnoxious status updates to Facebook.

An empty pier stretches into cool blue water on a blazing hot day.
‘How’s your Monday going, losers? HAHAHAHA!’ …etc

I can confirm this is incredibly fun, but only for about three days. Down that path lies alcoholism, crushing ennui, and the leather-tanned hide of an elderly rhinoceros.

Here’s what $100,000 really bought me:

  • The joys of open-ended travel (OK, including aforementioned cocktails)
  • Helping some friends finance their first restaurant (and they’re killing it!)
  • Being able to pursue projects that I couldn’t when working full time (like this blog)
  • Free time to learn new skills and hobbies, and take existing ones up a notch

Whenever I was tempted to splurge, I reminded myself of what I was working towards.

Maybe your goal is travel, or saving a house deposit, or starting a business, or something else entirely. It doesn’t matter, as long as it means something to you.

The sum of money doesn’t matter either. The exact same principles apply whether you want to save ten grand, $100,000 or a cool million. Getting there is only a matter of time and effort – and it only gets easier.

The first $100,000 is the hardest…

“The first $100,000 is a bitch, but you gotta do it. I don’t care what you have to do—if it means walking everywhere and not eating anything that wasn’t purchased with a coupon, find a way to get your hands on $100,000. After that, you can ease off the gas a little bit.”

— Charlie Munger

The cool thing about money is that once you have enough of it, it starts making more money all by itself.

In the first year of saving, I earned some modest investment income. The next year, I was earning interest not only on my savings, but on those earlier returns. And so on.

Net worth graph tracking upwards to the $100,000 goal.
The magic moment. You can see a slight curve as the investment returns start to come into play.

(Check out ‘The Beginner’s Guide to Becoming a Badass Investor‘ for an animated guide on getting started with investing.)

Over longer timeframes, compound interest is crazy powerful. Let’s say my goal was early retirement, and I decided to stay in full time work to maximise my savings.

It would only take a little over two years to save the second $100,000. The third hundred grand would come even faster still. Even if I never got a pay rise, I’d be a millionaire in about 13 years.

As it happens, at the time of writing I’m only doing a few hours of (paid) work. Nevertheless, my net worth is still growing. To build that sort of momentum takes a fair bit of initial effort.

…But it’s not that hard

“Wealth consists not in having great possessions, but in having few wants.”

— Epictetus

According to the denizens of news website comment sections, anyone living frugally must be a smelly, communist, cheapskate, dumpster-diving hermit. I resent that. I always put on deodorant (to mask the garbage juice smell).

Living simply doesn’t mean being some sort of miserable tightwad. My experience was the exact opposite. Once you have the basics of life covered, money doesn’t really correlate with happiness. The best things in life truly are free, or at the very least, dirt-cheap.

It doesn’t mean becoming a monk, either. I still spent money on travel, eating out, booze, pizza, concerts, and other such awesome things. I just had to figure out how to cut costs wherever possible, and restrain myself a little. Eating at nice restaurants is a whole lot more fun when it’s a treat, not a normal routine.

A little perspective also helps. Anyone reading this is by definition part of the richest and most fortunate cohort in human history. Kings of old couldn’t dream of the technological marvels and healthcare enjoyed by even the poorest among us today. There’s more power in our iPhones than the machines that put man on the moon, but heaven forbid we don’t immediately have the latest model.

You Do You – I’ll Do Me

“Dogs bark at what they cannot understand.”

— Heraclitus

Changing money habits takes some elbow grease at first, but once they’re locked in it’s all gravy. The bigger challenge might be dealing with the expectations of other people.

It’s tough to explain to your mates that you don’t want to do Expensive Thing XYZ – not because you’re a fun-hating scrooge, but because you have different goals and priorities to them.

Those who are most judgemental are usually the same alleged “adults” who are constantly broke and borrowing money from their mums, despite earning good salaries and having no responsibilities.

Smile, nod, agree.. then do whatever you were planning on doing anyway.

 

This is a good opportunity to practice giving zero fucks what other people think of you, which is a useful life skill in general.

It helps once you realise the most outspoken critics are slaves to their own impulses, to marketing, and to societal expectations. Their opinions are worth even less than their bank balances.

Buying Your Freedom, One Slice At a Time

“I would rather sit on a pumpkin and have it all to myself than be crowded on a velvet cushion.”

— Henry David Thoreau

Life is all about trade-offs. Frugal people choose to accept fewer possessions and luxuries in exchange for more freedom and time.

Here’s an example. Would you rather buy a flash new car for $25,000, or an ugly but reliable second hand one for $5000?

To me, the answer is screamingly obvious. Saving and investing that extra $20,000 would give you an extra quarter of a million bucks by retirement. Alternatively, you could buy a couple of years of freedom right now to start a business, travel, or learn a new skill.

Someone with different values might prefer having a cool car. As long as they’ve made an informed choice, all power to them.

I worry that people don’t consciously make that choice. I didn’t even know there was one. My careers counsellor forgot to mention I could retire young, if I just rejected the bullshit ‘keeping up with the Jones’ mentality. No-one told me there was an alternative to 40 years of wage slavery, a crippling mortgage, and a big house filled with junk.

I’m not trying to tell anyone how to live, but I do feel compelled to share my own experience. My eyes were opened by people brave enough to strip down to their financial underwear in public, and I’m forever grateful to them. This is my attempt to pay it forward.

 


If you made it to the end of this epic screed, you may be somewhat aggrieved that it didn’t contain any specific tips for actually, you know, saving money. Sorry about that! This post was already pretty long, so I’ve put together another one explaining how to slash every single category of spending.

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Richard MeadowsNataashaHusseinMayor Adam WestJoe Recent comment authors
Nataasha

Hi Richard, do you have a post on what sorts of things you were investing in or where/how to invest?

Hussein
Hussein

Amazing Richard this was great read…do you give one-on-one mentoring?

Mayor Adam West

Good read but I kept wondering, “so when the hell is he going to get into what he invested in to get the compound interest?”

I have tens of thousands just wasting away in my savings account and want to do something with it…Roth IRA? Other investment schemes?

Anyway, good on you brother. Congrats

Joe
Joe

When you say “a little over two years to save the second $100,000”, how does that happen–doubling your savings in under 2 years? That seems fast.

Stormy
Stormy

I really enjoyed reading this, you have a great writing style, I’m happy I found this blog! This really helps me to formulate a plan and reinforce some rules for myself with my finances. Being a freelancer without a typical income can make things quite difficult but it I feel a lot of the rules would still apply. Looking forward to my journey and more of your posts!

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Giovana
Giovana

That’s awesome, keep up the good work! My husband and I don’t have six-figure, high-paying jobs either but have made it to the $160k savings mark. It wasn’t quick but automatic deposits, slowly increasing our monthly savings whenever we got a promotion or changes jobs and investing is doing the trick. We’re now saving 40% of out take-home pay (wish it was more like 50% but living in Toronto is expensive). I guess the secret is consistency and paying ourselves first. We still get to eat out, have fun and travel, it’s just a matter of being smart about how you spend your money, where you spend it and how much you spend.

Carol
Carol

Just finished reading this and say awesome & congrats!! You also have a great writing style, was cracking up and learning at the same time. I agree 100% and while working on early retirement I am teaching my teenage boys what the school career counselors don’t regarding a life & all it’s b.s of keeping up with Joneses. There’s a better way to live! Thanks for sharing and baring “brave enough to strip down to their financial underwear in public”. hehe love it!

Monica
Monica

When you say that you have over $100K “in the bank” what does that mean? Where is the money allocated? All to investments? Some must be liquid.

Monica
Monica

Never mind, just read Net Worth Tracking.

Prashant
Prashant

If we have $100k how do we turn that to $500k is there any easy formula without risk?

Kirsty Naish
Kirsty Naish

minimalism is the key to financial success and happiness. you have worked that out at a young age – wise wise young man!

That Charles Life

This is real impressive! I’m currently on a 2-3 year trek to the 6 digits mark. Keep it up, maybe see you in SEA one day!

Andrew Ritchie
Andrew Ritchie

Having a goal and an aim is key. I drink the free instant coffee in the office and bring a sandwich for lunch. The $500 a month we don’t spend each month goes straight in our travel account currently earmarjed for the Tokyo Olympics. Small things like that add up massively over time. We also follow the drive a cheap car rule.

Richard Meadows
Richard Meadows

Awesome Andrew – sweet goal you’re working towards!

Jwadsred
Jwadsred

This is awesome dude!! Really keen to learn more and more! I’m 21 and already in $30,000 of debt out of complete and utter stupidity and disregard! My net worth is around -$10,000 an I really want to change things!

Can’t wait to see more on how to make this happen!!

Richard Meadows
Richard Meadows

Hey mate, you’ve got time on your side so don’t worry – plenty of people your age are a lot deeper in the hole than that!
More posts will be coming soon, hopefully you’ll find them useful.
cheers!

Michael Jagger
Michael Jagger

do you own accommodaton or rent? – btw-i’m 49 and have just started investing – never too late. It;s an emotional roller coaster but it’ll be worth it in the end.

George
George

Just came back from Cuba. Same eye opener, different cause. What do I really need in life? Nothing that costs much of anything. Anyone saying differently, is unaware that their opinion about your life has little effect on it (or your income). Further, it’s only something I can give myself. I never really considered investing as I always thought it required larger sums of money, but then, your perspective makes me think a little differently.

Richard Meadows
Richard Meadows

Hey George, would love to visit Cuba – nice! You can start investing with a surprisingly small sum. All shall be revealed in the investing for beginners post, which should be published in the next couple of weeks.

Natethegreat
Natethegreat

Could you put up your spreadsheet that you used to calculate your net worth and track your investment earnings?

Richard Meadows
Richard Meadows

Yep! I’m just working on getting a custom spreadsheet put together that I can share (my one is modified from an existing template, so there are copyright issues). Watch this space!

NZmike
NZmike

I’m 56 and it’s never too late! an applied state of mind and focus is all….might give the Pizza buzz a miss tho!

Richard Meadows
Richard Meadows

Yeah definitely never too late! And no worries, the pizza diet is not a requirement for success. Sure is tasty though…

Pad Britt
Pad Britt

Can you please reveal which stocks etc you’ve invested in …?

Richard Meadows
Richard Meadows

I’ll be doing an investment post in the next couple of months, so watch this space.

Lana Saffill

You have opened by eyes big time! I thought this was going to be another one of those general financial wisdom articles too, but you have definitely inspired me with this! I look forward to seeing what other snippets of wisdom you can offer. Thank you from an almost 28 year old who is ready to get rid of shitty debt and start saving some serious moolah!

Richard Meadows
Richard Meadows

Thanks Lana. Burn that debt to the ground! All the best, keep me updated on your progress.

Dionne
Dionne

Definitely worth the read! Im 18 and just started saving for a house deposit, goal is to have my own house by 21! With my wage it kind of put me down abit thinking I would never get there. But your post really opened my eyes to alot more detail, will be following and looking forward to more blogs!

Richard Meadows
Richard Meadows

Hey Dionne, that would be a seriously impressive achievement, go for it! Don’t worry about your wage at all – remember, there are plenty of people out there earning six figures who blow the lot. Keep us posted!