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. 

https://www.youtube.com/watch?v=eTrdnOSPjWQ

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.

Table of contentsWhat is Infinite Banking?Why the Banking Concept MattersBeing a Responsible BankerThe Power of Thinking DifferentlyThe Flow of MoneyBook A Strategy Call

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,