Be Your Own Bank: 3 Secrets Every Saver Needs

If you want to get your money to do the most, learn these essential keys to be your own bank. (NOTE: “Be your own bank and the Infinite Banking Concept” does not mean that you are literally a bank or creating a bank; rather, we mean emulating the idea of banking.)

Instead of being a saver who’s a star-student customer of the bank, this is how you supercharge your savings to control capital, earn interest, and increase your cash flow as you model the banking system – the most profitable business model in the world – and start becoming your own banker.

So if you want to keep your money at your disposal and earn maximum returns at the same time (without having to take on more risk), check out the podcast episode right now!

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In this podcast episode, you’ll discover the three simple steps to be your own bank:

• 1: Keep cash reserves
• 2: Own the reservoir
• 3: Master the art of arbitrage

Where Does Being Your Own Bank Fit into the Cash Flow System?

Being your own bank is a process of managing your cash flow so that you keep and control as much of your money as possible. This system, better known as Infinite Banking, is one step in your journey to time and money freedom.

That’s why we’ve developed the 3-step Business Owner’s Cash Flow System as your roadmap to go from ‘just surviving’ to a life of significance, purpose, and financial freedom.

The first stage is the foundation. You first keep more of the money you make by fixing money leaks, becoming more efficient, and profitable.

Then, you protect yourself with insurance, legal protection, and Privatized Banking.

Finally, you put your money to work, increasing your income with cash-flowing assets.

Why the Traditional Banking Model Works Against You

Most people grow up trusting the banking system without ever questioning it. We’re taught that saving in a bank is the safest way to secure our future. But when you take a closer look, you’ll see that traditional banks are built to serve their own profits, not yours.

When you deposit money into a bank, you lose control. The bank puts your cash to work for its benefit by lending it out at much higher rates while paying you a fraction of a percent in interest. They use your capital to build their wealth, while you carry all the risk of inflation and opportunity cost.

Meanwhile, your savings are exposed to devaluation, fees, and banking policies you can’t control. Traditional banking systems are not designed to protect or grow your wealth; they’re designed to profit from it.

Choosing to be your own bank is about reclaiming that control. Instead of allowing traditional banks to leverage your hard-earned dollars, you create a privatized banking system where your money works for your family, not for someone else’s bottom line.

Be Your Own Bank Step #1 – Keep Cash Reserves

Why do we model the bank? What do we want it to do for us?

As a customer of the bank, you put your money in the bank for safekeeping, between uses.

If you shift your lens and look at banking from the bank’s perspective, you’ll quickly learn why they’re the most profitable business model in the world.

The banker stores your cash and pays you for the use of that cash.

Because the banker stores cash, that capital offers opportunities to offer financing that will be repaid at interest. This means that because the bank has capital reserves, they have opportunities to put its money to work.

Check out our article on modeling the bank to see all the benefits the bank gets.

So, how can you store capital, so you can be your own bank and get the banker’s benefits?

You have to start by keeping capital in your control. The way to accomplish this is to pay yourself first.

True savings is capital that you control.

What do we mean by control? This leads us to step #2.

Be Your Own Bank Step #2 – Own The Reservoir

The easiest way to see if you are holding your cash where you have control is to ask who is getting the most use of that capital? Who gets the guarantees, earns the interest and cash flow, and has access to use that money? Spoiler alert: usually, it’s another person, bank, or financial institution.

You can think of all the money you earn flowing into your own reservoir. But, most often, it doesn’t stay in your own reservoir for long.

When you spend it, either through your lifestyle, by making loan payments, taxes, or even saving where someone other than you has control of your money, your dollars flow out of your reservoir into someone else’s.

Your Money That’s Not In a Reservoir You Own

For example, when you make your mortgage payment, that check leaves your reservoir and enters the mortgage company’s reservoir. They can now use that capital. Even if you think of the principal payment as going into your equity, with an outstanding mortgage, the bank owns your home, even though you have the keys. You’d still need their permission to use that capital, so it’s not in a reservoir you control.

When you pay the grocer, you transfer your cash to their ownership, and they now get to use that cash.

Paying taxes puts your dollars in the reservoir of the IRS, who now gets the most use out of that capital.

And when you invest your dollars, most often, you put them in the control of a financial institution.

Even savings are not exempt. If you save in the bank, the bank now has the use of that capital to earn a return on that cash.

The only way to own the reservoir and be your own bank is to have ownership rights to get to use it. That means you have it at your disposal and still earn a maximum return at the same time, while maintaining value without loss.

In other words, you’re in control when you have maximum safety, liquidity, and growth.

The Ideal Reservoir You Own: Whole Life Insurance Cash Value

You can be your own bank with life insurance and own the reservoir. This is known as the Infinite Banking Concept, a strategy of using a whole life insurance policy with a mutual company.

Nelson Nash, author of Becoming Your Own Banker, recognized the power of a high cash value life insurance policy, created the Infinite Banking Concept, and taught others how to design policies to maximize high cash value and long-term growth.

So, how do you own the reservoir with a participating whole life policy?

The premiums you put into whole life insurance policies are like cash deposits into your own banking system. The cash value is a store of capital that won’t drop in value. Safety, check.

You can access your cash value by taking a loan against your policy, so you maintain use and control. Liquidity, check.

As a whole life insurance policyholder, you’re an owner of the life insurance company and participate in the earnings through dividends. Because of dividends, plus guaranteed interest growth, your long-term internal rate of return is far more competitive than any other tool to store your reserves.

Whole life insurance policies give you the most safety, liquidity, and growth compared to other places to store your savings.

And, on top of that, your reserves continue earning uninterrupted compound interest, even while you use that same money outside your life policies to earn a secondary, external rate of return. Competitive, uninterrupted growth, a big, hearty CHECK.

All these benefits mean that your policy is indeed a reservoir you control.

But just putting your money into a whole life insurance policy won’t get you the banker’s benefits. You have to use your cash value, not just hold it. The way to put your cash value to work is by mastering the art of arbitrage.

Be Your Own Banker Step #3 – Master The Art Of Arbitrage

Banks don’t just take your deposits, hold them forever, and wait around for you to come take your money out. For them, that would be a losing proposition. After all, remember, they are paying you interest to store your capital in their vault.

The engine of banking really comes from their mastery of arbitrage.

Simply stated, banks acquire capital at a low cost and deploy it to earn more than their cost of capital.

If the bank pays 1% on deposits, it turns around and creates loans at 5%. (Because of fractional reserve banking, this is an even sweeter deal, because they can hold one dollar in reserves, and create nine more dollars to lend out.)

If it costs the bank one cent to make five cents, that’s a 400% return! (Profit/cost = $0.04/$0.01 = 400%)

Now think about this. Banks lend out money that’s highly likely to be repaid. They make loans and extend credit for businesses, mortgages, and cars to financially stable people. That’s how they lower their risk and increase their returns.

How To Be Your Own Bank Through Life Insurance?

To model the bank and use arbitrage, you want to put your money to work earning more than your cost of capital.

Find profitable investments you know and control, with a high likelihood of payment.

If a whole life insurance policy loan costs you 5% interest, and you can earn 12% in a real estate investment, your arbitrage is 140%. And this is the external RoR, on top of the internal return you’re already earning inside the whole life insurance policy itself.

How Becoming Your Own Banker Changes the Outcome

Let’s take a simple example to compare using a privatized banking system to traditional saving methods.

Alex and Jordan both worked hard, lived within their means, and wanted to secure their family’s future. Alex kept all his savings in a traditional bank, earning a fraction of a percent in interest. Every year, he watched inflation quietly erode the value of his efforts.

Jordan chose a different path. He learned how to be your own banker through a specially designed whole life insurance policy. By building cash value, borrowing against it for investments, and repaying like a private loan, he made his dollars work harder. Instead of losing ground, Jordan’s money grew steadily, even while he used it.

Choosing to be your own bank means letting go of the passive mindset—“How do I make my money work for me?”—and stepping into a position of ownership and leadership.

It’s not about hoping your dollars perform. It’s about building a system you control, with purpose.

Jordan didn’t just save money. He built a privatized banking system—one designed to protect capital, multiply it, and position his family to steward wealth for generations.

That’s the power of thinking generationally. That’s what happens when you take the reins.

Misconceptions of Being Your Own Bank

Choosing to be your own banker puts you in control, but it’s not a magic button. Some people mistakenly believe that policy loans are free money or that whole life insurance is an investment just like stocks. It’s important to understand that loans must be repaid to keep your privatized banking system strong and growing.

Another common misconception is that becoming your own banker is risky because of the life insurance component. In truth, when properly structured with a mutual company, whole life insurance is one of the safest places to store cash, offering guaranteed growth and stability.

How do I make my money work for me if I have to repay loans? The answer is stewardship. By treating your system with care — borrowing responsibly and repaying with intention — you build a lasting reservoir that blesses generations, not just your lifetime.

The Bottom Line for Every Saver

If you like to skim, here’s the bottom line:

• Be your own bank by owning and controlling capital
• Earn uninterrupted compound interest
• Start by maximizing the cash you keep and storing it in whole life policies with mutual life insurance companies
• Use arbitrage (leverage) to earn higher rates of return

If you’re ready to stop relying on traditional banks and start building a system you control, it’s time to take the next step. Learn how to set up your own privatized banking system and start putting your money to work for you.

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