I want to dive into a lesson from Nelson Nash’s book Becoming Your Own Banker, which lays the foundation for the Infinite Banking Concept (IBC). One key idea from Nelson is the importance of taking control of your financial system by ensuring your money flows back into an entity that you own and control. This simple yet powerful concept often gets overlooked, even by practitioners. Let me break it down with a real-world example.
The Problem: Money Flowing Out of Your Control
Let’s talk about something familiar—buying a car. Most folks go to the bank, borrow money, and buy their car. But who really wins in that scenario? The bank does. Your money flows out of your pocket and into their system, and you pay them interest on the loan. The bank controls the process.
Now, some people try to avoid paying interest by saving up and paying cash for the car. But here’s the catch: you’re still financing the car, just in a different way. When you pay cash, you lose the opportunity to use that money elsewhere to earn interest or grow your wealth. Either way, the money flows away from you and into someone else’s pocket. Whether you’re paying interest or losing out on potential returns, the bank is always in control.
Taking Control of Your Financial System
This is where Nelson’s genius comes into play. He asked a simple question: Why not have that money flow back into an institution that you own and control? That’s what I like to call the Borth Family Bank. Imagine redirecting your money so that it benefits your family’s goals and values instead of feeding the profits of big banks.
Think about all the money you spend, whether it’s on cars, homes, or services. In almost every case, the money flows away from your family and into the pockets of big banks like Wells Fargo, Chase, or Bank of America. Are those institutions aligned with your values? Do they support your goals? My guess is, probably not.
Real-World Examples of Redirecting Your Money
Let me share a personal example. I have a hedge in front of my house that grows like crazy. Normally, I’d hire someone to trim it, which would mean paying them and watching the money flow out of my system. But recently, I decided to pay my son to do the job instead. Now, the money stays within our family. It’s going to help him grow, whether it’s contributing to his own financial system or teaching him the value of hard work. The point is, that money isn’t leaving our control—it’s staying within our system.
This example might seem small, but it’s the essence of what Nelson was teaching. The goal is to have money flow back into an entity that you own and control, not into someone else’s system. Whether you’re paying for a car or hiring someone to trim your hedge, think about how you can keep that money within your own family or business.
Steps to Build Your Financial System
At the end of the day, it’s about control. If you have to ask someone else for permission to finance a purchase, are you truly in control of your finances? Or are they? Nelson’s message was clear: take control of your financial system. You’re already in the banking business, whether you realize it or not. The question is, do you want to give away your control to someone else, or do you want to keep it for yourself?
The first step is beating Parkinson’s Law, the idea that expenses will always rise to meet income. You’ve got to save. Start by saving 10-30% of your income, create your own pool of money, and then you can start making those decisions for yourself.
Conclusion: Take Back Control
It’s time to take back control of your finances. Stop letting big banks dictate what you can and can’t do with your money. Instead, build your own system, where the money flows back to you and your family. Taking control of your financial system isn’t just about building wealth—it’s about aligning your financial decisions with your values and ensuring your hard-earned money works for you, not against you.