becoming your own banker

Becoming Your Own Banker, Part 1

Want to get the nuts and bolts on Infinite Banking? What is the infinite banking concept? Why does it work? How does it benefit your life? In this new series, we’re returning to the source: the original text on Infinite Banking: Becoming Your Own Banker, by R Nelson Nash, the father of Infinite Banking. 

To start, we’ll dive into how banking impacts you, and why this macro view of the flow of money is just the perspective you need to take control of your finances. Jump into the conversation on the Infinite Banking Concept, learn from the original text, and gain understanding and wisdom to make decisions.

What is Infinite Banking?

Infinite Banking stems from Nelson Nash’s book, Becoming Your Own Banker. In his book, Nelson Nash shares how individuals can use banking principles to make better decisions about their wealth. It stems from the idea that we all finance everything we buy, even when we aren’t financing it by “typical” financial standards. In most cases, when we think of financing, we think of getting a loan to pay for something. So how does paying in cash mean we’re financing? 

Simply put, it’s about opportunity cost, and the ability to either pay or earn interest. Whether or not you see it, there is interest attached to every transaction. When you pay cash, you lose the ability to earn interest on that cash. This is opportunity cost, or the cost of making one decision over another.

[7:15] “Nelson’s definition of financing means that if you pay for things in cash, you’re also financing that [purchase] because you’re giving up the ability to earn interest on that money. So you’re either paying interest by paying it to an institution, or you’re giving up the ability to earn interest, which is the same thing as paying interest.”

Infinite Banking allows you to recoup as much opportunity cost as possible, via the policy loan provision on your cash value life insurance. When you take a loan, you’re not actually using your money, which means it continues to earn interest uninterrupted. This compounding effect is powerful. And even though you will pay interest on the policy loan, that compounding effect is incredibly valuable. 

Why the Banking Concept Matters

Now, we know that the average person probably isn’t walking around wishing they could be their own banker. So what’s the value in doing this? 

Part of what Nelson acknowledges in his book is that 3% of people control 97% of the world’s wealth. In order to do this, this 3% operates their finances a bit differently than the average person.

The basic idea is that the 3% have control of their money because of where they store it and how they use it. They recognize the power of financing and leverage, rather than paying cash for transactions, and can use that to create wealth that flows.

Essentially, through this system of control, you can eliminate the need to seek outside financing for many things. And the cherry on top is that you can do this with a renewable, growing pool of money by taking policy loans and paying them back. 

Whole life insurance itself is not the bank. It’s life insurance. But IBC allows you to use your policy so that it performs the same functions as the bank. What do banks do? They allow you to store cash, earn interest, and pursue financing.

The Case for IBC is: IBC simply allows you to take the control instead of keeping it with the bank. 

Being a Responsible Banker

Part of being your own banker and using life insurance to fulfill the banking function is being a responsible banker yourself. You are the “manager” of your funds, so it’s a good idea to hold yourself accountable for your choices. 

IBC isn’t just about capitalizing and using your cash. First, you have to save that cash. This is a long-term, lifelong strategy you’re embarking on. While you have the opportunity and flexibility to finance whatever you want, you also have to save diligently. And not every deal is going to be a winner. It takes time, patience, and due diligence.

As you grow your pool of cash, opportunity will find you. So don’t worry too much about missing out.

Responsibility also means paying back your loans in a reasonable amount of time, when you choose to finance something. A policy loan gives you a lot of flexibility, but it’s important not to abuse that flexibility. If you can pay a loan and it makes sense financially, do so. Save that flexibility for when you really need it. That way, you stay in a position of liquidity with your cash value as much as possible.

The Power of Thinking Differently

What is financial freedom? We’ve observed that while everyone’s precise definition is nuanced, most people can agree that it’s about feeling free and being able to meet your needs easily. If you put in the work and are willing to be patient, you can experience this freedom by implementing infinite banking. 

The implementation, however, requires you to think differently than the way mainstream financial media would like you to think. And remember, if 3% of people control 97% of the wealth, there’s probably something to be said for thinking outside of the box. That 3% didn’t get there with a 401k and paying for everything in cash. Nor did they get there by being hyper-concerned with interest rates. 

[38:10] “I think that’s really important to re-emphasize… Nelson, at the time, implies that he had the answer [to his financial troubles] sitting in his insurance policies. And the reason it didn’t come to him sooner is because he was thinking like everybody else.”

[40:39] “We are saying store your capital where you control it and where you have access to it.”

[42:07] “[Nelson] made the point that banks thrive in every interest rate environment–whether it’s a low-interest rate environment or a high-interest rate environment. And that’s why he said interest rates don’t matter.”

The Flow of Money

[43:09] “There’s a system of the flow of money… It’s not random who is in a position of control, it’s not random who owns most of the capital. It’s not random where the money flows and who the 3 percent are, and how they think in order to be in control of most of the money in the world. So if it’s systematic, then it’s created through habits and through a process. And it’s something that’s repeatable, and it’s scalable. And you can use it to improve your financial life when you recognize that there is a system—a flow of money at work.”

You can tap into the flow of money by learning how to become your own banker and take control of the banking function for yourself. You can do this by creating good financial habits, saving into whole life insurance, and learning how to properly capitalize on your wealth. Over the course of this series, we’ll be going over Nelson Nash’s book, Becoming Your Own Banker, so you can learn the principles he discovered, and tap into the flow of money.

Book A Strategy Call

Do you want to coordinate your finances so that everything works together to improve your life today, accelerate time and money freedom, and leave the greatest legacy? We can help!  Book an Introductory Call with our team today, and find out how Privatized Banking, alternative investments, or cash flow strategies can help you accomplish your goals better and faster. That being said, if you want to find out more about how Privatized Banking gives you the most safety, liquidity, and growth… plus boosts your investment returns, and guarantees a legacy, go to to learn more.

Rachel Marshall

Rachel Marshall is the Co-Founder and Chief Financial Educator of The Money Advantage and President of Marshall's Insurance and Financial Services. She is known for making money simple, fun, and doable. Rachel has built a team of licensed professionals (investment advisors, insurance agents, attorneys, tax strategists) to help her clients create time and money freedom with cash flow strategies, Privatized Banking, and alternative investments. Rachel is the co-host of The Money Advantage podcast, the popular business and personal finance show. She teaches how to keep more of the money you make, protect it, and turn it into cash-flowing assets.
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