we're both old men, we can't go as fast.

He's older.

"Oh, I'm gonna work 12 hours, gonna work 14 hours".

Now Desmin and I were just having a conversation

about how to manage money.

I think that's a very very important topic.

I thought I will share this with you.

I don't know where this goes but I think I wanna give you

some tips that will benefit you as well.

- Yes, thanks sifu.

I guess for context for you guys,

I came just a few minutes ago, I was showing sifu Dan Lok

my finances, right.

I was late on my taxes, believe it or not,

many of you might know my story.

I was on the verge of bankruptcy a couple of years ago.

Thanks to this wonderful mentor of mine who helped me

to not only dig myself out of that mess I was in,

but now I'm living a fairly

I would say-- - Comfortable life.

- Comfortable life, right.

I think most people would aspire

to get to the same position I'm at

and I say that very humbly.

But now what?

What to do next?

I was late on my taxes at first,

my corporate taxes and my personal taxes.

I had to get that mess cleaned up.

Now that that's cleaned up I showed you the numbers.

I guess just to put things for people's understanding,

I don't own a home yet

but I make a multiple six-figure income,

I live in a designer concrete home,

three floors fairly nice and big,

I've got a luxury S.U.V.

I know that you always talk about middle class

buy a lot of assets that are actually liabilities.

I actually just got thrown under the bus here

for one of them,

so I thought maybe you guys could learn at the same time.

I'm at that stage right now

and some of you might be at that stage--

- Or maybe you are just getting started.

You are still going through school and you're wondering.

You just got your first job

and you just have some money coming in.

How do you manage it?

Because one thing I always say

"It's not how much money you make,

it's how much money you keep".

And it's not just how much money you keep,

it's how well you invest that money.

Now think back to when you came to Canada.

You were struggling financially.

You were making just tiny bit of money.

Now, compared to back then, you are ten times.

Ten X what you were making before.

Were did that money go?

- That's correct.

Where's it going every month?

- And think about even if you make two,

three times more than what you're making now,

where would that money go?

It's the habit that's more important, not just the amount.

I hear this all the time,

I used to lie to myself this way too.

"Oh, once I make more money I'll manage it".

That's not how it works.

It's the habit that makes a difference.

I don't care if you're making minimum wage.

You have maybe $2000 coming in every month.

You are not managing $2000 well,

5000, 10,000, 15,000 is going to be exactly the same.

You'll wonder to yourself

"Where did all that money go?".

And in fact you'll probably have more stuff,

you're more in debt, you have more credit card debt

and all that stuff.

Then you think "Oh let me get to the 20,000, 30,000

then all my problems will go away".

It won't.

It's the same happening.

- And it's probably even worse,

'cause I'm in middle-age now,

so I don't have much time so I'm desperately

trying to play catch-up on what are some of the smarter

things I can do with the money I've got.

- First, because most people don't know

that money has many jobs.

- I didn't know that.

- Most people they think that money has one job,

which is to spend.

They think "I get money, I spend money".

Broke people believe,

growing up thinking money has one job.

People who are a little bit smarter know money has two jobs,

which is to spend and to save.

The really smart ones, they know that money has three jobs,

which is to spend and also to save,

and to invest.

- Spend, save, invest.

- The very wise people, they know that money has four jobs,

which is to spend, save, invest and donate.

You look at Warren Buffet, you look at Bill Gates.

Those are the people who really get it.

Money has four jobs.

The way that I used to, and this is not new by the way,

I learned this from the book "The Richest Man in Babylon".

This is not from me--

- The bucket right? - The bucket, right.

It talks about that.

I want to keep it very very simple

because here's what I notice.

If you make your money management system very complicated,

you're not gonna use it,

you're not gonna use it,

I'm not gonna use it.

No one's gonna use it.

I want to keep it very very simple,

so I use the bucket money management system.

- So, what exactly is the bucket management,

I guess for simplicities sake?

I mean, I sometimes have discipline.

I think I'm pretty disciplined person,

you would agree.

I find myself having "shit happens", life happens.

"Oh, suddenly this month we need this,

or that month we need this".

- Something always happens.

- It's hard to maintain that discipline

when all these emergencies keep popping up.

- So, very simple. Imagine every dollar that comes in.

You divide it into five buckets.

Very simple.

The first bucket is what I call your necessities bucket.

This is where you pay your bills,

I would say 60% of your money.

Every dollar that comes in, 60 cents goes into this bucket.

Your electricity bill, your car payment, your house payment,

all that stuff, your internet, your cellphone bill.

That's your necessity bucket.

Let's say you're making 1000 bucks a month, hypothetically.

600 bucks goes into this.

You're making 10,000, 6000 goes into that, very simple.

So that's 60%.

The next bucket is what I call your emergency bucket.

Then 10% of your money, every dollar that comes in,

goes into this bucket.

Emergency money means money put away for a rainy day.

It could be medical expenses,

it could be something happens to your family,

you want to have that money there.

People talk about emergency funds.

I don't like to touch this money.

- How do you not touch that?

- I just put it away.

What I do is I actually go to my bank banker,

set up a bank account where every dollar comes in

it goes into this account.

- It's like a savings account. It's nothing fancy.

- I don't touch.

I do not touch.

It just goes into there.

Don't feel like "Oh yeah, I want to take a vacation,

let me dip into that money".

That's not--

- You wouldn't use that money to buy gold or investments

or stocks or something came up, you wouldn't touch it?

- No.

From a psychological point of view,

what I notice is when you have cash it attracts more cash.

I don't have time to go into all of that,

but what I notice is when you have money,

when you have the habit of accumulating money

you accumulate more money.

When you don't have the habit of accumulating money,

you always have no money.

It doesn't matter how much money you make.

That's the second bucket.

The third bucket is the investment bucket.

That's also 10%.

So, 60%, 10%, 10%, that's your future.

That's your retirement.

"The Richest Man in Babylon" talks about pay yourself first.

This is the pay yourself bucket. The 10%.

It's that 10%.

Then you have 10% is, what I call, your learning bucket.

This is where you learn your skills.

You go to the events, get coaching,

seminars, online courses. 10%.

So imagine you've got a thousand bucks.

600 bucks goes into the first necessities.

Then you have a hundred bucks goes into the emergency.

A hundred bucks goes to investment.

A hundred bucks goes to learning,

it could be reading a book.

The last one, that last 10%, that's your fun bucket.

- The fun bucket, okay.

- That's your Montblanc pen,

that's your chutoro, that's your sashimi.

(laughing)

- It might be a little bit big,

that bucket might be a little bit big right now.

- If you know it's 10% then there's no guilt.

When I buy something fancy like A.P. watch

I use the fund money.

I do not touch all these other money.

Then there's no guilt,

but if you don't put it in a bucket then it's very easy

"Oh well, I should take that vacation."

Suddenly, your learning bucket, that's gone.

Your emergency bucket, that's like, next to nothing.

- I've got a question sifu.

I know that you also say "Invest in yourself",

and my investment bucket is very small right now and,

as you know, where we live it's very expensive.

I mean, I would be saving for years

before I could even make a small investment.

Correct me if I'm wrong,

but I've taken some of that investment money

and have invested it into learning.

I've doubled-up my learning by investing in myself

to get higher income skills.

Then through the high income skills

it increases more income,

and then I should start now to fill that up.

- You notice, when you use the bucket systems,

the first reaction most people have is

"I can't live off 60%, there's no way in hell.

That's not enough."

Then you know you need to upgrade your skills

so you earn more.

We talk about this a lot.

- So not just cutting coupons, saving money--

- We're not talking about that.

At the same time, while you're increasing your income

you need to have the habits in place.

I rather if you cannot do the 10% right now,

do 1%.

- Do something.

- Do 2%.

Because you need to have the habit in place.

If you have zero habit and you think it's some future thing

that's gonna happen.

It's not gonna happen.

If you cannot do, okay let's say 80%, going into that,

let's do 5, 5, 5, 5.

- Would the bankers look at you weird if you go to a bank

and just say I want--

- They would.

Doesn't matter; they're broke.

It doesn't matter.

It's the habit that makes the difference.

Your investment bucket, that's your golden goose.

I think I was reading statistics,