Book Review 2021: Becoming your own banker

There are only two sources of income:

  • People at Work
  • Money at Work

We used to live in a society where a man worked and a woman stayed home to raise the children and teach them values. From a financial perspective, this was enough to raise the family. Nowadays, both parents are at work, and families across the country barely make ends meet.

Could it be that there’s no money at work? asks Nelson Nash in his book called Becoming Your Own Banker.

And what happens if you get back every dollar you put in? Would you ever object to putting more money into it?

This is just a fraction of the concept known as “infinite banking” that Nash explores in his 92-page piece.

If you search for alternative banking concepts, Becoming Your Own Banker is a book that you’ve certainly bumped into. 

The book is the foundation for everyone who wants to start infinite banking (other interchangeable terms we use often are lifestyle banking or private family banking), and it is a must-read! 

Let’s see what the book is about!

Table of Contents

    Becoming Your Own Banker: Structure and Concept

    We will not go through all the chapters of the book and do an individual analysis of what Nelson Nesh said. We recommend everyone with a whole life insurance policy or plans to embark on this journey get the book from Amazon (fifth edition), because it will make it so much easier for you.

    The book is structured more like a guide than a traditional book. Nesh offers useful advice and examples that will help you APPLY the knowledge from this book in your life. This is what it’s all about.

    We can divide the book into five parts:

    1. Becoming Your Own Banker (Chapters 1 to 7)
    2. The Human Problems: Understanding Parkinson’s Law (Chapters 8-12)
    3. How to Start Building Your Banking System (Chapter 13 – Nesh presents different models)
    4. Equipment Financing
    5. Capitalizing Your System and Implementation

    Let’s analyze some of the things about the book and its author:

    How Nelson Nash Developed the Infinite Banking Concept

    Nelson Nash

    Nelson Nash was an interesting and knowledgeable man with vast banking, life insurance, and real estate experience. When you look at his experience from this perspective, you’ll see that he got exactly what he needed to develop the infinite banking concept.

    They don’t say for no reason that in our darkest times, we manage to find the best solutions.

    This happened to Nash as well. Apparently, back in the 1980s, Nelson Nash found himself in the situation of having to pay 23% interest for $500,000 worth of property.

    Facing this kind of challenge and going through it would put him in a massive financial crisis, so he had to find another option.

    He then realized he could borrow against the cash value of the whole life insurance policy. The policy loans had much less interest paid.

    Technically, there were no limits for the amount of cash being borrowed as a policy loan; the only thing that was supposed to be taken care of was ensuring that the built-up cash value was as high as possible.

    So, Nash had to change his finances and financial system to pay more for whole life insurance premiums, which gave him a huge amount of cash value.

    Eventually, he had success, so the concept of borrowing money against the cash value of a whole life insurance policy (with tax-deferred advantages) was born. And today, we call it the infinite banking concept.

    Book Title: What Does Becoming Your Own Banker Mean?

    Becoming your own banker is the book’s title, and it is pretty self-explanatory.

    It’s an easy system that lets you use lifestyle banking to build up your cash value. It is a concept that enables you to take money out of or borrow money from your life insurance policy instead of going to the bank or other people or financial institutions for the same service.

    An important note you should be taking here is the following: this concept only makes sense if the rate you would need to pay to take the loan is lower than the rate you would be paying somewhere else to borrow the money.

    What is Lifestyle Banking?

    The concept of “infinite (lifestyle) banking” is about strategically using your whole life insurance policy from a mutual insurance company as a personal endless banking system, allowing you to build wealth, get a new car, earn interest, finance your vacation, or generate enough money to start investing on Wall Street (if this is something you want) and overall earn financial peace.

    In other words, lifestyle banking is essentially becoming your own banker.

    It means you can take a loan against your whole life insurance policy as long as your premiums are paid. It is in your interest to pay premiums—this means that you will never have to borrow money from the banks.

    But doesn’t this mean that you’ve only changed the institution? Instead of banks, you are now borrowing from the insurance company. Technically, this is true, but getting a loan from an insurance company has multiple advantages, such as: 

    The infinite banking concept works on a couple of principles. With this idea, your goal should be to become financially successful and pay for your lifestyle.

    To do so, you need to build the value of your own bank, which can be done by repeating the process of lending and repaying money stored in the cash value of a whole life policy.

    Benefits of a cash-value life insurance-based system:

    • Freeing yourself from banks
    • Not worrying about a loan rate banks set
    • Full control of your finances
    • Once you become your own bank and master the system, it will become a routine

    Lifestyle banking goes back to the whole life insurance payout. As you know, a whole life insurance policyholder is guaranteed a payout on their deathbed if they’ve paid the premiums regularly. That means that after the policy owner passes away, the beneficiaries will be given the payout and an opportunity to continue to build wealth. Your beneficiaries can continue contributing to all that money you’ve saved and keep their own bank!

    How Does Lifestyle Banking Work?

    In our blog, we wrote How to Get Started with Infinite Banking, where we go in-depth about working the system to your advantage.

    Here, we will just refer to the book and summarize what it means to become your own bank and how this system functions.

    There are three major steps:

    1. Overfunding (with after-tax funds) a high cash value whole life insurance from a life insurance industry
    2. Cash value accumulation (tax-free) throughout your years as a policyholder.
    3. You use tax-free loans against your policy’s cash value for your financial expenses.

    This concept allows you to borrow the money against your cash value in the same way you would borrow from a bank. Additionally, you are also ensuring that your whole life insurance is earning dividends at the same time.

    The life insurance industry is on your side on this one. It is in their interest that you get permanent life insurance that you will pay regularly and increase the entire cash value balance over time. Thanks to cash value accumulation, you become your own bank and become financially free, which is the whole point of this insurance policy.

    We’ve explained lifestyle banking (what Nesh does throughout the book), but let’s see now what’s located in each part of the book. We will not reveal too much, but it can be your guideline as you read it!

    Part 1: Becoming Your Own Banker Summary

    After writing a short introduction about himself, Nash gets right to the point. He shows the importance of imagination and sets the values you need to follow because you are also the product’s consumer and seller. In Chapters 3, 4, and 5, he discusses taxes, creating your own bank, and how dividend-paying whole life insurance works.

    And speaking of dividend-paying whole life insurance: “The first principle that must be understood is that you finance everything that you buy—you either pay interest to someone else or you give up interest you could have earned otherwise,” says Nelson Nash.

    Before he wraps up with Chapter 7, Nash ensures his message is clear. It takes years to build your own bank. One does not become a banker overnight. What’s important is to give up on conventional thinking and stick to the financial strategy that works.

    Part 2: The Human Problems: Understanding Parkinson’s Law Summary

    After Part 1, you should have the technicalities in order. Part two deals with the human factor. Here’s a quick visualization of Parkinson’s Law:

    Parkinson's law

    And a quote of what not to think like:

    “I don’t have any money to buy a home (go to college, buy food, endure an emergency, care for my health, maintain the lifestyle that I desire, etc.), so there should be some sort of government program to provide these things for me. I have a right to them!”

    Also, in this part, Nash talks about the mortality rate and how you want the highest-cost life insurance possible for banking purposes without it becoming MEC. As the name suggests, a dividend-paying life insurance policy opens up the possibility of earning annual dividends, which can go high in good insurance companies!

    Out of 1,000 Americans born, 1,000 die

    Image source

    Part 3: How to Start Building Your Own Banking System Summary

    Want to buy a car?

    This chapter will explain to you how you can use lifestyle banking for a major purchase, such as a vehicle.

    Buying a car is one of the first steps you can take, to see the power of infinite banking and the guaranteed growth you receive as you pay premiums. Starting with the mortgage is possible, but this is a huge paradigm shift and a sudden lifestyle change, and it is not the best path beginners should take.

    Nash provides concrete steps on how to make this work.

    Part 4: Equipment Financing Summary

    You know there’s more than a death benefit in dividend-paying whole-life insurance by now. Nash covered technicalities about creating your bank, considered the human factor, and showed that you could build your finances around insurance.

    Now it is time to find a reliable insurance provider that will create you a custom policy! At Wealth Nation, we can do that for you—get your policy and start your journey with Wealth Nation!

    Part 5: Capitalizing Your System and Implementation Summary

    Nash wants you to start with this system: “The longer you wait, the more you have penalized yourself.” Therefore, in the last chapter, he offers you tips on how to do so.

    First, you must really see that this is the way to go. From this moment on, this will be your financial life. The strategy isn’t about paying cash once to buy a policy and then letting the miracle happen. Because it won’t.

    Before you start, ensure that this is 100% something you want to do and can devote time to. After a while, banking through your policy becomes routine. Although there’s always the cash surrender option to get some of the money back, it is better to estimate if this is for you early.

    3 Main Lessons Wealth Nation Got from Becoming Your Own Banker

    We already concluded that Nelson Nash is a genius—there is no doubt. Here’s what we learned by reading Nash’s book!

    The Opportunity Cost of Money

    This is the first principle we learn from the book, and it says that everything a person buys is financed—either by borrowing from a lender or using your own money—otherwise, they would have received the funds.

    Nash further teaches us the concept of EVA (economic value added), which proposes that you use your own funds as a cost of capital. By doing this, you stop paying interest to others and start saving money for yourself.

    Also, having in mind dividends—or how Nash defines them—a form of principal’s return can merely impact your success with IBC. The key is to understand the amount of money you would usually be paying other companies—and deliver it to yourself. That way, you ensure you’re not paying the interest to anyone else.

    Borrower & Lender Concept

    The entire concept is built on having both borrowers and lenders. What is an important lesson Nash teaches us is that it will take a couple of years to run major purchases with our personal bank.

    One of the estimations is that it is required to implement it for at least five years to generate enough cash value to begin financing purchases. It will take even longer if the purchase is more prominent (for example, a car or house).

    If you want to establish IBC from the ground up and leave it to the next generation, you should know that this is a long-term investment and a project that will require the next generation to continue where you stopped. It takes 20 to 25 years for the average individual to fully assemble their personal bank that can finance everything using life insurance.

    Discipline is the Key

    We can find this in almost every book about personal finances or a successful business; it is not a coincidence.

    One of the main messages Nash sends us is never to allow our costs to follow our incomes. He says that everyone who cannot put spending urges aside and save money is destined to be a slave to their own finances and can never earn the freedom the IBC brings.

    If you want to become your own banker, your costs can never consume your income!

    In Case You Missed It…

    Life insurance-based banking offers multiple benefits and allows you to raise your financial life to a whole new level! Nash displayed the benefits of paying back interest, borrowing money from your insurance provider (taking a policy loan), and becoming your own banker.

    However, he didn’t list them, but we’ve got them here for you! Here are the benefits of becoming your own bank:

    Cash Flow & Liquidity

    What is the most liquid asset? Well, cash, of course! Becoming your own banker allows you to maintain cash flow and liquidity all the time and eliminates any worries regarding this. And there’s no limit to how much you can earn!

    Loans possibilities

    Taking a policy loan any time you need it and setting all the requirements that come with it gives you a lot of safety and advantage. Being your own banker means that you are in charge of loan possibilities. Still, having the opportunity to take out loans doesn’t mean that you don’t need a strategy. Having insurance requires responsibility, and so does being your own bank. When you are a banker for yourself, you need to think of ways to use that money and pay back interest. Otherwise, you are getting into debt.

    Tax benefits

    We discussed different ways to invest your money and get a return on the investment. But what is characteristic of infinite banking is that this way, you will not have to pay taxes that you would otherwise pay. Remember that you don’t overfund your policy too much for it to become a modified endowed contract.

    Money Growth

    It’s important to remember that lifestyle banking is a capital accumulation strategy, which means that your cash value will increase throughout your life—even when you’re taking loans. Borrowing becomes easier over time as your bank grows!


    We know that we all need a place to put our savings; in this case, there is no better safety net than a permanent life insurance policy. You know your cash value grows with compound interest, and you know your beneficiaries will get the death benefit. Additionally, you know that while you are still alive, you can access your savings anytime and manage them however you need in case you need a change of strategy.