How is Lifestyle Banking Replacing Traditional Banking

Traditional banks have been so ingrained in our daily lives that we believe we can’t live without them. We use a banking system for money storage, savings, and taking out loans to fund anything we need.

The biggest problem with traditional banks is that they’re too rigid for modern people. A lot has changed in the last decade—we have different needs, priorities, and—most importantly—lifestyles.

But did you know that you have other options than traditional banks? Well, you do!

And here are the reasons why traditional banks don’t work anymore and how you can use an alternative system to own your own lifestyle.

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    Goals Misalignment: Three Reasons to Reconsider Your Banking

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    When we take a look into the history of banking, we can see that from the very beginning, banks and people had different goals. And it is still the same.

    Banks are businesses first. They focus on profit and growing their operations. Although our reasons for using their services may vary, they typically fall into one of the following categories: 

    • We want enough money to cover living expenses such as food, clothes, medical bills, etc.
    • We want enough money to afford a car, a house, a vacation, etc.
    • We want to use the money we earn to make more money through investments (in retirement or anything else).
    • We want to financially support our loved ones—kids, family, and friends.

    As a result, the goals of banks and ours are diametrically opposed: we want to be able to finance our own lifestyles and earn money through our work and skills, whereas banks are systems that generate wealth through our money.

    Do you know how banks have managed to become increasingly wealthy over time?

    When people don’t have enough cash on hand, the first thing they do is head to the bank to get a loan. Banks charge interest on top of interest on every loan anyone takes out. 

    And just like that, they’ve surpassed every other business in terms of profitability. 

    #1 Banks Charge You to Use Your Own Money

    How often has it happened to you to pay $2.50 to make a withdrawal from a cash machine? Probably more times than you could think of.

    It is so common that we don’t even think about it. But since everyone has a bank account and withdraws money from the ATM, imagine how much that adds up on a monthly or annual basis.

    We don’t want to say banks are rich because they charge you a couple of bucks to withdraw cash, but it is a great example of how they charge us to use our own money, and for us, it became normal.

    Not to mention the other fees, high-interest rates, and penalties we’re paying. That’s how banks work—they set the rules in their favor and charge us for moving our money.

    But it doesn’t have to be that way. With Lifestyle Banking, you can access your money whenever you need it and for any reason, without any fees or interest rates you need to pay. 

    On the contrary! But more on that later.

    #2 Banks Don’t Allow You to Grow Money

    As we already mentioned, banks are making profits by charging high interest rates. 

    Someone may wonder – “That’s not possible! My bank is only charging me 3%.”

    Even though that may be the case, we want you to think about the volume—the number of times you are going to pay during the course of your life.

    When you look at things from that angle, you can see how much money you’re essentially giving away to banks. Hundreds of thousands of dollars are leaving your pockets every year.

    Let’s say your house income is $250 000, but at the end of the year, you’ve only got $20 000. Where did the rest of the money go?

    It covered a debt in the form of principal and interest. Research shows that the average household pays more interest every month than they’re saving.

    According to the FDIC, the national average savings account interest rate stands at 0.35% APY. This means that for every $100 of money that you entrust to banks, you can expect to earn $0.35 per year.

    On the other hand, do you know how much return you can get on the money you put into your whole life insurance policy? It’s usually between 4% and 8%. Imagine what you could do with that money for you and your family.

    #3 Banks Are Losing Our Trust

    According to EY research, only 20% of consumers believe banks are highly trustworthy, and only 15% highly trust mutual funds, investment advisors, brokers, or financial advisors.

    The main reason people don’t trust the banks as before is that it has become evident that banks will never prioritize users’ needs over theirs. 

    We know that we can’t just close all of our bank accounts because we still need a place to store our money and a system to make transactions. 

    But what if we could flip the script?

    Lifestyle Banking uses the same logic as traditional banking—moving money and recapturing the interest. But in contrast to banks, this process isn’t meant to be corporate-structured.

    Instead, the idea of Lifestyle Banking is that every individual with their own unique goals and priorities has a reliable way to fund their lifestyle. That way, we can prevent banks from managing and moving our money for profit.

    On top of that, we get the control and flexibility we need. Here is how you can start your personal banking system.

    Lifestyle Banking Is the Future

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    We learned this from Nelson Nash, who wrote the book Becoming Your Own Banker. He taught us that we could do exactly what the banks do, but in a way that actually met our needs and goals.

    The strategy Nelson Nash invented is called Infinite Banking. It’s a process of utilizing a specially designed whole life insurance policy to build up cash value over time.

    The goal is to create a stable financial system that gives people more control over their money and possible tax breaks. The policyholder becomes their own source of financing and can use the cash value of the policy to invest in other businesses, pay off debts, or meet other financial needs. 

    We took the basic idea of infinite banking and brought it to another level, so this process suits your lifestyle and helps you experience a money mindset shift from old habits to new ones. 

    It’s a process we call Lifestyle Banking.

    How Does Lifestyle Banking Work?

    To start Lifestyle Banking, the first thing you need is a well-designed whole life insurance policy. It’s really important to work with people who are familiar with this process and can help you every step of the way. 

    Whole life insurance policies have a savings component, also called cash value. That’s why people often refer to these policies as “high cash value”.

    The cash value inside the high cash value policy grows over time, giving you funds that you can use to finance your own lifestyle.

    As with any life insurance policy, you need to make regular premium payments to keep the policy in force. With Lifestyle Banking, the larger portion of the premium goes toward building up the cash value rather than toward the insurance component.

    Over time, the cash value component grows based on the interest rate set by the insurance company. You can access it at any time through policy loans or withdrawals, as soon as the cash value has built up to a significant level.

    You can take out a policy loan against your life insurance, and the cash value of the policy will serve as security. You can use these loans for anything you want, from investing in real estate to paying off debt to starting a business or even financing a vacation.

    As with any loan, you have to repay it with interest. But here is the difference from a bank’s loan—in the case of Lifestyle Banking, the interest payments are paid back into the cash value of the policy.

    That means that the policyholders are essentially paying themselves interest and building their wealth from month to month.

    How Do I Recapture the Interest?

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    We become our own source of financing through the purchase of a cash-value life insurance policy. Instead of borrowing money from the bank, we’re borrowing from our life insurance policy and paying ourselves interest.

    Before you question why you would pay yourself interest, let us share this perspective. If your money is good enough to pay the bank, it should be even better for you to pay it back to yourselves. You’ll have the freedom to choose the interest rate, and the result will be the growth of your cash value.

    The process can be done over and over again, and that is our goal. Rinse and repeat!

    Over time, the policyholder can build up a large source of financing that isn’t tied to banks or other traditional financial institutions. And the best part—Lifestyle Banking overcomes all the challenges that traditional banks couldn’t.

    How Can Lifestyle Banking Help You

    With Lifestyle Banking, you have greater control over your finances. When times are tough economically, it helps to know that you have some say over your future. 

    Policy loans can be used for a variety of purposes, and the policyholder can set their own repayment schedule. This gives you more freedom than a traditional loan from a bank, which may have more rules and restrictions.

    On top of that, whole life insurance policies used for Lifestyle Banking may offer certain tax advantages, such as tax-deferred growth of the cash value and tax-free withdrawals or loans.