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In this episode, we are joined by Richard Canfield, an Amazon Bestselling Author, Podcast Host, and Authorized Infinite Banking Practitioner. Richard’s life took a transformative turn in 2009 when he came across the book “Becoming Your Own Banker, Unlock The Infinite Banking Concept” by R. Nelson Nash.
The profound ideas presented in the book resonated deeply with him, and he knew he had found what he had been searching for all his life. Today, Richard and his team are on a mission to share the powerful message of financial hope and control. Their focus lies in putting people in the driver’s seat of their financial lives and creating durable, dependable, generational wealth.
Richard shares the concept of Infinite Banking as we delve into its principles, benefits, and practical applications. Through this discussion, Richard provides valuable insights and strategies for keeping more of one’s hard-earned money and reducing taxes. His expertise and passion shine through as he shares actionable steps to implement this financial approach.
Drawing on his experience as an Authorized Infinite Banking Practitioner, Richard works closely with families, business owners, and real estate investors, and in this episode, he talks about how to strategize how you can maximize the wealth that flows through your hands over a lifetime.
Unlock the infinite potential of Infinite Banking and discover how it can pave the way to building generational wealth.
In This Episode
- How one book transformed his perspective on finances and set him on a new path.
- The concept of Infinite Banking
- Practical tips and strategies about Infinite Banking and financial control
- Important lessons he learned from Nelson Nash
Welcome to today’s show on Wealth Strategy Secrets. We’ve got another excellent episode lined up for you. Today, we’re joined by Richard Canfield. In 2009, Richard’s life changed completely when he read the book Becoming Your Own Banker: Unlock the Infinite Banking Concept by R. Nelson Nash. He realized this was what he had been searching for all his life.
Nelson Nash became Richard’s personal friend and mentor, and now Richard and his team teach the powerful message of financial hope and control to North Americans. As an Amazon bestselling author, podcast host, and authorized infinite banking practitioner, Richard is passionate about empowering people to take charge of their financial lives and create durable, dependable generational wealth. They work with families, business owners, and real estate investors to strategize how to keep more of the hard-earned money that flows through their hands over a lifetime. You may recognize Richard as the co-host of the Wealth Without Bay Street podcast and co-author of Canada’s Guide to Wealth Building Without Risk, as well as Cash Follows the Leader. Richard, welcome to the show!
Super pumped to be with you, Dave! I’m excited to be here and to have the opportunity to add some value to your amazing listeners and your great community. You and I, before we hit the go button, were discussing many of our unique similarities and overlapping connections. I’m just thrilled to talk about something I’m passionate about, which you are also uniquely passionate about. It’s going to be a ton of fun!
I’m grateful to have you on the show, Richard. I think listeners are going to enjoy this one. As you said, sharing these like-minded ideas with people will help them gain insights and make better decisions in their own lives. That’s what this is all about. So, why don’t we kick things off?
For those who aren’t familiar with you, can you tell us a little bit about your background and your journey—how it all started for you?
Absolutely! I’ll take you back a long way. When I was a kid, I grew up in a very small farming community outside of Edmonton, Alberta, Canada, home of the Edmonton Oilers, for anyone familiar. I spent my childhood building fences and working on the farm, so I understood the value of hard work from a young age.
We had a small family-based business, and I was the heir to the portable toilet kingdom of Camrose, Alberta—what I like to call the “prince to the throne.” I learned many lessons in that small family business, but we were the typical operators in a family-owned business. We were technicians, not business owners. We didn’t grasp the fundamentals of running a business, and even though coaching existed back then, we were unaware of it. Today, with the Internet and platforms like TikTok and Facebook, there are so many opportunities for people to learn these skills. And of course, with strategic coaching—like we talked about—that’s an incredible opportunity to learn how to think differently and develop those skill sets.
We didn’t have necessarily access to those resources, so we just kind of put our heads down and worked hard—heads down, work hard, heads down, work hard. That’s all we knew.
In that environment, I learned a lot of valuable lessons. Interestingly, when I was quite young, I was actually known as the “bank” in my household. I always had cash available, which I kept stored in my closet. If family members needed cash—maybe my parents wanted to go out for the day but didn’t have any money in their wallets—they would come to me, and I would make them write an IOU on a piece of paper.
What I didn’t fully understand at the time was interest. There was no teaching or learning about charging interest or late fees for repayment. I just knew I needed to track the money I lent out. Growing up as the youngest of several kids allowed me to observe the experiences of those ahead of me, giving me intellectual shortcuts about the things I didn’t want my life to resemble or paths I didn’t want to take.
I recognized the importance of honing in on money management. Around the age of 11, my mom told me I had to start buying all my things. I would get paid, though it wasn’t an official wage and was never consistent. The payments depended on how much money was available in our seasonal business throughout the year. I worked hard—like a rented mule—and I learned that if I wanted extra food, snacks, or anything beyond just having a roof over my head and food on the table, I had to buy those things myself. This was one of the best lessons I ever learned.
I began to understand the value of a dollar. Nowadays, we often discuss the devaluation of money, but fundamentally, it is essential to grasp that the more you manage your money, the more money you’ll have to manage. That’s something I learned years later from a friend of mine who’s a real estate investor. I was always mindful of my dollars.
Later on, around age 19, I got into personal development. I began participating in various programs, including some high-end, intense experiences. I even did the whole walk-on-hot-coals thing!
I started to realize, “What do I want to do in the world? How do I want to show up and add value?” What connected with me was the idea that if people had a better understanding of how to manage their money and take control of their financial lives, they would see positive results. More money leads to a ripple effect—what’s the reduction in stress? How does it improve their relationships with their spouse, their children, and everything else in their lives?
Stress is probably the number one health issue that people face. And often, the leading cause of stress in households is financial concerns. If we can solve even a portion of that problem, bit by bit, we can make a difference. After all, the journey of a thousand miles begins with a single step. In your financial life, you need to take those steps to improve; there’s simply no way around it.
That drive and experience led me into investment real estate, where I became involved with various real estate groups and organizations while continuing my personal development journey. Then, leading up to 2009, a good friend of mine and co-host of our podcast, Jason Lowe, introduced me to the book Becoming Your Own Banker. At that time, I was a licensed realtor, just about a year into my career.
When I read this book, I had a moment that many people can relate to—a feeling of deep frustration that I couldn’t quite put my finger on. I got this book in the summer during a busy real estate season, and while many people might read it in a couple of hours, it took me two weeks because I kept starting and stopping. After a while, I noticed I was becoming a bit snippy with people. I had a chip on my shoulder, which was unusual for me, and I couldn’t figure out why I was feeling that way.
Eventually, it hit me: I knew, at a fundamental level, that I needed to teach people what was in this book. But before I read it, I had no idea what that was. You don’t know what you don’t know, and as you gain knowledge, it reveals gaps in your understanding. It’s like throwing a rock in a pond; the ripples expand your knowledge base. Reading that book opened a whole new door for me.
I had always been looking for this information. I remember getting my very first rental property mortgage at 18. Technically, I was a landlord at 12, but at 18, I got my first mortgage on my own. I looked at the mortgage document, ran my amortization calculations, and even bought a book filled with numbers to help me understand interest rates and payment calculations. I was fascinated by real estate and money management.
I get that I’m winning in this deal, but what’s the deal with the bank? What’s up with them?
That realization led me to the passive income I wanted; I craved that payment stream. I thought, “We’re on the wrong side of this deal. How do we get onto the other side?” I discovered a few different ways to do that, but then I came across the book Becoming Your Own Banker. Wow, that sounds incredible. Is that possible?
And what’s the answer?
Yes, it is possible! It all begins with how we think—everything starts there. Once you understand the fundamentals, the potential you can create in your life is incredibly powerful. As I dug deeper, I realized that it would be a disservice to myself and a matter of personal integrity if I didn’t share this book with others.
This led me on a journey to become an authorized practitioner. I eventually met Nelson Nash, the author, and got to know him. He was an unbelievable human being. I’m sure you have had incredible mentors in your life, Dave, as I suspect many of your listeners do. Nelson was one of those enigmatic figures. Once you entered his sphere, it just drew you in. He had a remarkable way of conveying and downloading information to you in a way that was both simple and powerful. I have immense respect for learning from individuals who have experienced life over a long time frame.
He passed away in March 2019, and that was a very sad day. He was 88 years old and used to say he had completed “88 revolutions around the sun.” Even when he was in the hospital, about to undergo surgery, and fairly certain he wouldn’t come out, he was still reaching out to people. He emphasized, “It’s all about the message.” He was constantly giving and didn’t believe in retirement; he believed in living a life of value and adding value to others. Mentorship was a core principle for him, and his teachings reflected that.
Nelson was also a real estate investor with a background in forestry. He made some of his most profitable deals in land and development. Many of these successes stemmed from taking policy loans from the insurance contracts he owned because that’s where he stored his money. You need a warehouse for your money; it has to rest somewhere while you wait to use it. Whether you’re going on vacation, buying a new car, purchasing gifts, or investing in the next real estate deal, money has to move from where you keep it to where you want it to go.
That’s what banking is—it’s the movement of money from one place to another in a relatively short period. The problem is that most people in North America don’t realize they should control that movement and decide where their money is stored. Often, they store it in someone else’s bank. You get paid for your work, your rental income, or your business, and all that money goes into someone else’s bank, where it sits until it’s time to pay bills or manage life’s expenses.
That bank gets your money before you do. If you understand the power of becoming your own banker, you can gradually transition that idle money sitting in someone else’s bank into a system that you own and control, typically with a mutually owned insurance company. This type of financial institution isn’t a bank, but when done correctly, it has certain features and benefits that allow you to mimic and model banking functions that you control.
The key difference is who owns the system and how much control you have over it. That’s what infinite banking is all about.
Wow! That’s such a great overview, and what an epiphany you had when you picked up the book. It’s quite a story. I love how Peter refers to it as your MTP—your Massive Transformational Purpose, right?
Exactly! It’s about figuring out what you’re meant to do in life. It reminds me of that scene in the movie The Jerk with Steve Martin, where he exclaims, “Mom, I found my purpose!” People must discover their purpose, and I appreciate how you ground everything in that concept of creating financial freedom and understanding what that truly means.
I completely agree. There are many different products out there for various financial needs, but we should start with your vision and what it means to you. As Dan Sullivan often says, a lot of this is based on four freedoms: the freedom of money, the freedom of purpose, the freedom of relationships, and the freedom of time. These are the things that allow us to do what we want to do.
When we look at alternative products like infinite banking, it’s about control and reducing stress. You’ve mentioned having your money work for you, which brings us closer to those freedoms. I appreciate the perspective you bring to this topic.
You can’t put a price on control, though people might try to measure it. Some individuals, especially those who are high fact-finders, might attempt to quantify it based on their Colby scores. But ultimately, it comes down to asking yourself: What do you value? How much value do you place on having control—especially over your own money and financial decisions?
Take a moment to reflect on your current financial situation. Write it down: “I’m in a 401(k), an IRA, or maybe in Canada, an RRSP.” You might have a tax-qualified registered plan to be invested in the stock market, or perhaps you have rental properties. Consider all those different buckets of money and the loans you may need to take.
To what degree do you feel in control? At the time of this recording, we’re facing some uncertainty in the banking realm, with a few significant collapses in the news recently. Think about the implications of having your money in demand deposits.
Every time you deposit money in a bank, you receive a deposit slip—essentially a receipt that states the bank owes you that money. In other words, you become an unsecured creditor of that bank. Once you give them your money, you relinquish custody of it. It’s now their money, and you only have that slip to prove you can retrieve it, as long as they still have it.
This system relies on trust. We have built a framework of trust in the banking system, but when that trust is broken, we start to see issues like bank runs and other significant problems. I don’t want to go too deep into that rabbit hole, but it’s essential to consider.
When you’re dealing with a properly structured, well-designed insurance company with a long history, you can enjoy similar functions and features as a bank but with greater control and security.
It’s not identical, but it’s similar. You still need the convenience of a debit card. When you store your money there, it’s in constant motion—it’s yours. You are the owner.
You co-own the company. When you want to borrow and access capital, you can tap into whatever’s available to lend from your pool, but you’re accessing it from the insurance company. So, you’re not borrowing your own money; you’re borrowing theirs. This means your money is always in motion.
It never stops. It remains uninterrupted for the rest of time. The only thing that can interrupt it is someone passing away. That’s an easy fix; you just get an insurance policy on everyone you reasonably can.
By doing this, you create a diversified pool of insured lives. So, there you have a way to establish a multigenerational aspect to your strategy. The key takeaway is that you’re in the driver’s seat. You dictate the terms of borrowing: when you get it, how you get it, how much you take, when you pay it back, and what interest rates you want. All of these factors are determined by you, rather than having to jump through someone else’s hoops.
We are always dealing with borrowed money. You will need access to money for the rest of your life; I don’t know anyone who can avoid that. One day, we’re all going to graduate to the next phase, and until then, we need to use money.
So, we can agree that we need a place to store our money while waiting for it to work for us. Would you prefer to store it in someone else’s system, where they reap all the profits and revenue, or in a system where you have ownership and control, sharing the profits with others like you? In the worst-case scenario, someone dies.
Well, in one situation, your family has to deal with the money in the bank, and in the other, they receive a tax-free check. It seems like a no-brainer.
Great points, Richard. I’d like to back up a step here. There’s so much confusion in the marketplace about what infinite banking is. It goes by many names, and this can create a lot of misunderstandings. We can have a deeper discussion on that another time, but I want to make this practical for our audience.
Could you give us your definition of infinite banking? What exactly is it? Can you explain that? Then we can jump into some practical examples of how people can use this in their lives.
Absolutely. I’ll reference the source, which is Nelson’s book, Becoming Your Own Banker. On page 3, he states that the whole idea is to recapture the interest one pays to banks and finance companies for major life purchases, such as automobiles, major appliances, education, homes, investment opportunities, and business equipment.
The infinite banking concept isn’t about investments per se; it’s about how one finances the things of life, which can certainly include investments. So, in my definition, infinite banking is a way of life. It’s something you do continuously; it’s just about how much of it you control.
With the infinite banking process and concept implemented in your life, there are some mechanical and tool-related aspects that are required to make it work. However, the actual act of engaging in it is something you do continuously for the rest of your life. It’s about how much of that lifestyle and mindset you incorporate into all your financial transactions, which will determine how much financial value flows through your life.
The goal is to harness the cash flow in your life so that it can serve multiple purposes as many times as possible. You want to be able to reuse it while you’re alive and leave as much of it behind tax-free to the people you love and care about when you’re gone.
So, it’s about maximizing the cash flow so it can do more than one job for you, repeatedly.
Exactly! That was a great summary. Now, let’s get into some specific use cases. Let’s explore your top two examples of how someone could utilize this. Sometimes, when people hear about this concept, they might think, “Okay, I think I get it, or I’ve read the book,” but they are still just dipping their toes in. They haven’t fully utilized it yet. We also talk to a lot of folks who say, “Oh, I have this policy set up,” but they don’t know how to use it. So, walk us through an example to make it real.
Sure! The first example that comes to mind is from my personal experience. Right now, in my family system, I have 12 whole life insurance policies. These are all optimized for this concept, and I’m looking to add a 13th one in the next couple of months. I’m always looking for ways to grow my system, just as you want to grow all of your assets.
For instance, I recently converted a policy for my wife, who is an amazing stay-at-home mom. I needed to convert some insurance on her, and I had been waiting for the right time to do it. I set up the original policy about eight years ago, and it was finally time to make the conversion.
The annual premium for this new policy is around $36,000. The minimum required contribution is about $10,000—let’s keep it simple and just say $10,000. So, while I’m required to contribute that amount every year, the additional $26,000 is completely optional and flexible for me. I get to dictate when I want to contribute, how I fund it, and all those details.
That’s where control comes in. In real estate, the three magic words are “location, location, location.” In the infinite banking system, the three magic words are “control, control, control.” It’s all about the degree of control you have over everything you’re doing.
The purpose of this policy was twofold: First, I needed to convert some permanent coverage for my wife, which was something I wanted to do anyway, so that checked a box for me. Second, I have to pay a tax bill every year. I don’t know too many people who get through the year without having something due to the IRS or the CRA in Canada.
With my business, I operate using a system called Profit First, which you may be familiar with. I separate every dollar that comes in as revenue and allocate it into different accounts, one of which is a tax account. Each year, I plan for that tax bill.
In my case, the Canadian government is going to get the money, and they don’t have a sense of humor about it if I don’t want to pay them. They’ll make a big fuss about that. Especially with the way they’re spending money these days, I’m going to go ahead and make that payment.
However, I want to harness that tax payment to do something beneficial for my family before it goes to the government. My tax bill, roughly speaking, is somewhere between $25,000 and $40,000 a year for that one corporation. It turns out that my $36,000 annual premium was already set aside to pay the tax bill, so I simply ran it through the policy.
Shortly after I did that, I borrowed around $23,000 from that policy within a couple of days. I used that, along with a little extra capital I had set aside in the corporation, to pay my tax bill, which let’s say was $35,000. So, I used some policy funds for that from the insurance company’s money, plus some excess funds I had available.
But the entire amount of the tax bill ran into a system I own and control for the rest of my life first. In the process, I instantly created about $120,000 of additional permanent whole-life, tax-free death benefits for my wife in one shot. I also increased my ability to earn dividends, which are a share of the insurance company’s reserve profits—the divisible surplus. As a co-owner, I get to earn a share of their profits because I own this policy. They distribute those profits to me once a year, and I can decide how to use that income.
So, that whole ripple effect came into play. Now, every time I pay a tax bill, I run the money through a policy that I control. I maintain constant motion on that tax bill, allowing it to do multiple jobs for my family before I give it to the government. Once that system is built, it gets better each year. If my tax bill increases, I have already established a system that allows me to capture that growing tax bill because I’m becoming more profitable each year. Does that make sense?
Absolutely. I’ve created an environment that allows me to take the same money that would automatically walk away from me—cash flow leaving every year to a government entity. They’re still going to get paid, but I dictate the terms of how and from where they get paid. They will be paid with the insurance company’s money, not my own. My money stays in constant motion.
Now, the next year, I need to start saving up to pay the tax bill for the following year. I know exactly where I put all that money: as soon as it is deposited into the bank, I make a transfer to pay down the policy loan. Once the policy loan is repaid, I build up what I need for the premium again, pay the premium, and then take a loan to pay the tax bill. I’m now in a cycle where I control the environment.
These are all banking transactions. This isn’t an investment; I’m not investing any money in the insurance company. I’m not talking about a rate of return; I’m talking about containing cash flow for as long as possible.
So you’re taking control of your capital and putting it to work, increasing its velocity by placing it in the policy before making that future payment. In addition, you’re also creating more value through the life insurance you set up.
Guest: Exactly! Let’s talk about another example. A lot of people like to pay down their mortgage. Everyone has different thoughts on this. Real estate investors, for instance, have varying perspectives. Many people believe in paying down debt, and there’s nothing wrong with that. However, wouldn’t it be better to recapture that debt? What if you could eliminate the third-party lender?
Think about it: whether it’s for your car, a family vacation, business equipment, or your home mortgage, you’re sending your hard-earned money to these lenders. But before you do that, what if you ran your payments through an insurance company system designed by a qualified professional? You could access the insurance company’s money to pay off the debt.
Now, the debt wouldn’t be with the third parties anymore; it would be with an entity that you co-own. You would essentially become your lender. Every dollar you pay back to them is a dollar that you can access again for future needs. In contrast, if you pay off your home mortgage, that money becomes trapped in the property.
There used to be a popular commercial in Canada featuring two kids walking around the house at night with flashlights, looking for equity. One boy asks, “What are we looking for?” and the other replies, “Equity! Dad said it’s in the walls.”
If you want to access the equity in your property—whether it’s a home, rental property, multi-family unit, or commercial space—you either have to borrow against someone else’s pool of money or sell the property. If you sell, you give up the future potential of that asset. So, you’re essentially making an opportunity cost decision.
There are only two ways to liberate equity: through collateralization or by selling the asset. Those are your options, and in either case, you’re dealing with someone else’s money. But if you’re using the insurance company’s funds and you co-own that company, you get to share in the profits and have complete control over the terms of when and how to reallocate that money based on your real estate deals or whatever financial endeavors you have going on. You truly have total control.
See, Nelson Nash said that when you classify things properly, everything becomes very simple. Unfortunately, the insurance industry has done a poor job of classification. They never should have called it whole life insurance; what they should have called it is a personal monetary system with a death benefit as a side feature.
Of course, that’s a bit of a mouthful, and we’d need a better acronym to describe it. But that’s essentially what you have. If you understand how to use it effectively, imagine this: if we both had two identical cars coming off the assembly line, you and I could talk about how our different Colby scores affect our decisions.
I can tell you for sure that I’m probably going to get a lot more speeding tickets than you, and I’m likely going to drive the car a little harder than you. I’m just taking a wild guess, but that’s most likely the case. Now, if we had two identical cars coming off the assembly line, and five years later we had a mechanic assess those cars—looking at the exterior, the engine, the braking system, the rust, and all that—we would end up with two very different vehicles. Would you agree?
Yes, absolutely. The day they came off the assembly line, they were the same. So, what changed?
The way we drove them.
Exactly! The difference lies entirely in our behavior. When it comes to success in managing the banking aspect of your life, it’s crucial to recognize that someone is always fulfilling that banking function for you. It can be you, but for most people, it isn’t. The behavior of whoever is operating that function will dictate their success. That’s where quality education, podcasts, training, and coaching play a significant role.
So how do you quantify that, Richard? A lot of people are accustomed to evaluating yields on different investment vehicles. We’re often thinking about ROI and yield. Since this concept is somewhat elusive, how do you calculate that value from a quantifiable standpoint?
That’s an excellent question. The key is for individuals to get clear on what they value. If you don’t have a measuring stick for your values, it’s challenging to quantify anything. It’s easy to create numbers on a spreadsheet, but remember that spreadsheets can be misleading—they can lie just as easily as they can tell the truth. It all depends on the numbers you input and how you interpret them.
That makes sense. If you and I were looking at the same spreadsheet for the first time, wouldn’t our interpretations differ even though the numbers are identical?
Yes, exactly! We’d have to discuss it to understand what we’re looking at. If we filter that data through our values, we can then quantify what it truly means to us.
Okay, I have two additional questions to break that down. The first one is about opportunity cost. You mentioned putting money into this system, and we know that part of that goes towards your premium. On average, what should people estimate in this regard?
Yes, opportunity cost and the question of how much to allocate toward premiums are two separate issues. Let’s discuss opportunity cost first. It manifests in many ways, particularly for real estate investors and business owners, who tend to look at it differently than others in society.
When considering your capital, let’s say you decide to put $5,000 toward a family vacation. As soon as that money is spent—perhaps you use a Visa card and then pay it off—you need to think about the opportunity cost associated with that decision.
So, that $5,000 is gone, and in return, you have the memories of the family vacation. The opportunity cost of not going on vacation is that you miss out on those memories. That’s one aspect of opportunity cost. Financially speaking, if you’re 40 years old and plan to live until 90, you have 50 years of future earning potential tied up in that $5,000, don’t you?
Let’s use a simple example. I don’t have a future value calculator handy, but if we assume a conservative rate of 4%, that decision could potentially translate into around $25,000 to $30,000 over time. So, that $5,000 vacation today is effectively worth about five times that amount in the future. It ultimately comes down to whether you can contain the money effectively.
If you have a containment facility for that money that is always in motion and continually growing for you, you can capture the opportunity cost of that spending in a way you couldn’t before. This highlights how the Infinite Banking Concept (IBC) differs from typical investments.
Nelson Nash defined investments as things you know a great deal about; everything else falls under speculation. Many people refer to their financial products as investments, but that doesn’t mean they are actual investments for you. It simply means they are something you can invest in, but you’re essentially speculating on the outcome. If you are well-trained and knowledgeable in a specific niche, you can make informed decisions that constitute a real investment.
That’s the key distinction. If you need to access money for a $50,000 private mortgage or a $50,000 piece of investment real estate, the funds have to come from somewhere. If you draw from your cash, you can only use that $50,000 for one purpose: to purchase the property. Once that money is tied to the asset, you can’t easily retrieve it to pursue another opportunity.
However, if you funnel that money into a well-designed policy first and then access the same $50,000 using the insurance company’s money (other people’s money, or OPM), you now have funds working in two places at once: in the insurance contract, where they remain in constant motion, and in the investment property. This allows you to effectively do two things simultaneously while benefiting from significant tax protection that you wouldn’t have in the first scenario.
It’s about control, opportunity cost, and the efficient utilization of your money. IBC emphasizes efficiency over mere investing. Investing is something everyone should consider, but only if they are knowledgeable about what they are doing.
I think some people confuse these concepts, thinking it’s one versus the other. But the powerful idea you mentioned is that you can take the same dollar and use it twice. If you study the ultra-wealthy, you’ll see they excel at creating multipliers with their money—they focus on making their dollars work harder by performing multiple functions.
You’ve already touched on a dozen important points, such as creating legacy wealth, fostering tax-free growth, establishing a tax-free income stream for retirement, and maintaining liquidity. When you encompass all of those factors and consider how they align with what matters most to you, you can effectively assess their value.
Absolutely. I’d love to share something related to the legacy aspect that you highlighted. Can I tell you a quick story about a conversation I had last night? It was one of the most meaningful discussions I’ve had with my wife in a long time.
It was just phenomenal. We discussed the possibility of launching a podcast together, which is kind of exciting. After putting the kids to bed—my kids are 5 and 7—they both had a karate belt test yesterday and earned new belts, which is great. So while my wife was putting my son to bed, we were talking about a lot of things, and somehow the conversation turned to why our family is awesome.
My son chimed in, saying there are plenty of reasons why we’re awesome, including the fact that Mom stays at home while Dad works from home, which allows us to go on vacations and enjoy these experiences. A lot of that, he mentioned, is because of our family banking system. So there we were late at night, and my son voluntarily shared this information with my wife, which was pretty cool.
Let me tell you about the fundamentals of legacy and how we approach these topics. I know you have triplets and several kids, and you’ll probably be entering the grandkid phase soon. I’m sure we could have a fun conversation about that!
When it comes to legacy, I started teaching my kids about the family banking system when my daughter was about two and a half. I found opportunities in the storybooks I was reading to her at bedtime to introduce the idea of a family piggy bank. Now, when we go on vacation, we have a family banking meeting.
Since my kids are still quite young, we keep these meetings short—about 10 or 15 minutes—to hold their attention. They get a treat afterward, which they love! During our last family banking meeting, we discussed passive income and the books I’ve been writing and how they will generate long-term passive income. We also talked about active income.
For instance, when I’m standing in front of a computer in my office with a camera on me, it may not look very active. But when my wife is creating a cool art piece out of wood in the garage and someone pays her in cash, the kids can see that activity produced a result. Does that make sense?
Yes, absolutely.
Great! So we talk about the differences between active and passive income and connect it back to our family banking system. Anytime we do something fun—like going out for dinner or enjoying a family vacation—I always bring it back to the question: “So kids, why are we able to do these things?” And they both respond, “Because of the family piggy bank or the family bank!”
It’s awesome! High fives and big hugs follow, and then I ask, “What do we need to make sure we do?” They reply, “We have to put the money back in, Dad.” I say, “Great! And why do we have to put it back in, kids?” They respond, “So we can use it again later.”
Now, do my kids know what a bank is? Do they understand what an insurance contract is or what an investment means? Do they care about any of that? The answer is no. What they recognize is that we get to have fun experiences, and it all comes from a reservoir or pool of money. When we access that pool, we’re essentially draining some of the water out.
We have to put the hose back in and refill the pool—it’s that simple. We’re operating within an aquarium, where nothing we work with financially leaves the aquarium, but the aquarium keeps expanding in size. That’s what infinite banking is all about; that’s what family banking is about, and it’s about the legacy you can create.
The stories we tell, the words we use, and how we engage in conversations about money within our households—whether your kids have left home or you have grandchildren—will be the defining factors in the success of the generations that follow you. We all have the opportunity to approach this differently, and in my opinion, Nelson’s concept can help bridge some of those gaps if people can change how they communicate and think.
Now, let me share a scenario with you. Imagine for a moment that you have 45 rental properties. I don’t care if they’re 45 doors in two buildings or 45 single-family homes; you have 45 properties that are all fully paid for. They’re all generating annual cash flow and enjoying guaranteed market appreciation, regardless of market fluctuations or upcoming presidential elections. Are you with me so far?
Yes.
Great. Now you’ve aged a bit, and it’s your time for graduation—you’re no longer with us. At the moment of your passing, 17 of those properties, all fully paid for, automatically sell for 100% of their highest appraised value. There are no real estate fees, no closing costs, no estate taxes, and no capital gains tax. It’s all 100% tax-free and goes to your family, with a check cut for them. There’s no need to worry about listing the properties. Are you still following?
Yes.
Now, you have 28 properties that are still fully paid for and producing cash flow, which the family inherits without any tax consequences. How do you like my real estate deal so far?
It sounds pretty solid.
Want to know who created that? His name was Nelson Nash. He wrote an incredible book called Becoming Your Own Banker. Nelson had 45 whole life insurance policies at one point—actually, he had 49 but gave a couple away. When he passed away at 88, he was operating on the benefits for his great-grandchildren.
So when Nelson passed, 17 tax-free death benefit checks were issued. The 28 policies—while not physical real estate, still represent property—were transferred 100% tax-free to his family members. All of those policies continued to produce and grow cash every single day. They were all seasoned, and they will yield a tax-free estate value in someone’s life.
Some of those policies might not have materialized in that format for nearly 100 years, which means Nelson created four generations of nonstop capital accumulation for his family—all because of how he thought, not just because of the products he used or the investments he made. He controlled the banking function and approached things differently.
Wow, that’s such a great example. I want to ask you another question, Richard, because I think many people struggle with this topic when they consider proceeding. It can be challenging to figure out, you know, what do I figure out in terms of my premiums? Right? What is the size of the bucket that I wanna create? And there’s lots of different ways to look at it. I would love to get your thoughts on that.
That’s a really good question. So, first of all, everyone has said for a long time, and if you go back to some well-written books like The Richest Man in Babylon, you’ll find that you should be saving or setting aside 10% of your gross income.
Now, if you’ve been able to do that, congratulations—you’re ahead of the game compared to most people, as many aren’t doing that. But why stop at 10%? You can start there, but there’s no reason you can’t incrementally increase that amount.
Set a solid goal and a clear target. Without a good goal, you won’t make much progress. Think of it like using Google Maps: you plug in your destination, and it guides you there, even rerouting you if there’s an accident. That’s how life works, including your financial life. If you don’t have a goal, you won’t get to where you want to be.
At a minimum, I believe a person should plan to save 10% of their gross household income. That’s a great starting point. If you can’t reach that, then do what you can.
Here’s the key thing we find when meeting with people—and I’m sure you see this all the time, Dave: when you help them sort through their financial mess, it’s like cleaning out a junk drawer. Everyone has a bit of a mess. You start to see things they’ve overlooked, like how they’re spending money on unnecessary mortgage insurance or how they could consolidate monthly expenses into annual payments. You can often identify ways to save 10% in multiple areas of your life, freeing up cash flow to reinvest in your financial system.
People tend to allocate money to various savings buckets—like education funds, vacation funds, home repair funds, and escrow accounts for rental properties. All this money sits in accounts, which is often inefficient. By analyzing these buckets of inefficiencies, we can strategize to reallocate existing funds, creating a more significant impact on your family’s financial well-being.
So even if you start at just 10%, when you work with a good coach, we might uncover another 5% or even 10% that you can save. This flexibility allows you to make better decisions, especially when unexpected funds come in—like a tax refund, an inheritance, selling a property, or an investment payout. Life throws various opportunities at us, and it’s important to be ready for them.
Speaker: You know, all these different little events happen. If you have a dedicated space, a warehouse to strategically store that when it happens, optimized for your life, everything begins to change. But it all starts with one step. I think starting with 10% of your gross household income is a good foundation, but people should be targeting something closer to 25%.
This is because you’ll be borrowing and using that money back in your life, which means your potential for increasing your income is greater than most people realize. However, you won’t truly understand it until you experience it.
The next piece of this is that I asked Nelson Nash several times in our conversations, “How did you know when it was time to start a new policy? When did you know it was time to grow your system?” He would consistently respond, “Richard, as soon as my feeble brain could envision doing so.” That answer was laser-focused every single time, which means that your mindset—what’s going on between your ears—is the only limiting factor to what’s possible for you. That’s the summation of Nelson’s 88 years of wisdom on this topic.
Your behavior and what’s in between your ears is the only limiting factor to what’s possible to you.
Awesome. Love it, Richard. Now, let’s transition a bit to the personal development side. I know you’re a huge proponent of that yourself. If you could give the audience just one piece of advice on a practice that has yielded the most results for you, what would that be?
We touched on this a little before we hit the record button, and it’s the Colby A Index. I’m a big fan of Kolbe. When I say “practice,” I mean that the Colby Index teaches you about your innate, instinctual way of accomplishing tasks in the world. How do you do things every day? How do you instinctively go about getting things done?
You might already know some of these things, but when you can detach from that knowledge and read it to recognize key areas, it fundamentally helps you think about how to operate more effectively and efficiently in the world. Just today, I was discussing Colby with my wife, and I have a binder with a lot of that information. We’re planning to introduce our children to these concepts because they use colored bars, which are visually appealing for kids, and I think it will spark some fun discussions in our household.
My wife and I have fairly different Kolbe profiles, with her being a mediator, but we also share some key similarities. When we recognize tension or conflicts that arise, we can pull out this binder and flip through it. It’s like, “Oh, here we go. This is where I went wrong. I see I’m doing something in this area that makes it difficult for you.” So, it’s a really helpful tool.
What Kolbe did for me was help me understand that I was perfectly alright, that everything I was doing was the way it was supposed to be done, despite what the world was telling me. I often heard, “Why can’t you just do this?” or “Why can’t you just do that?” It left me wondering if there was something wrong with me, questioning why I couldn’t do things the way others did.
But it turns out, I’m just not built that way. When I do things my way, I often achieve better results. I might start 100 projects and only finish 25, but that’s just how I’m wired.
I started 100 projects and got 80 of them to 50% completion, and 25 of them were finished at 100%. Meanwhile, someone else only started 10 projects. So, there’s nothing wrong with either method, and there’s nothing wrong with you. What could be transformative for you is understanding what’s perfectly right about you and amplifying that as a game-changing tool in your life. Kolbe has done that for me.
Love it, Richard. I think understanding your unique ability is definitely one of the most valuable insights you can gain about yourself. It’s been fantastic to introduce that concept to our kids. For listeners interested in this topic, we had Julia Waller on the show, where we delved deep into unique ability and the Colby test. I highly recommend checking out that episode; it’s insightful.
It’s been amazing to create a team that works in harmony with unique abilities, especially as our kids grow up with that understanding. I love the word “harmony” because it fosters so much more cooperation in the household compared to friction. People are simply wired a certain way and want to do things their way.
I also attended a couples workshop with my wife, where we worked through each of our Kolbe scores. We’ve become so much more congruent and understanding of each other because of those insights. I only wish I had known this 25 years ago! So, thanks for sharing that, Richard. I appreciate you coming on the show today and providing so much value, wisdom, and insights from Nelson and your journey. It’s truly powerful.
If people would like to connect with you and learn more, what’s the best way to do that?
I’d love to offer everyone a free digital download of our most recent book. We’re launching another one shortly, but our second book, Cash Follows a Leader, is available now. It’s a quick, easy read with great pictures and images. You can find it at cashfollows.com.
There are a ton of great resources available there. You can also connect with us through our podcast, Wealth Without Bay Street. We’re on YouTube at wealthwithoutbaystreet.com/youtube, nice and simple.
One last thing I’d recommend, if you don’t mind, Dave, is that almost all the good in my life stems from getting to know and meet Nelson Nash. I want to share the ripple effect that can have on others. There’s a fantastic documentary we commissioned called This is Nelson Nash: The Creator of the Infinite Banking Concept.
You can watch it at nelsonnashfilm.com. It’s an hour well spent, especially if you want to connect with the idea of money and discuss it with your spouse. It’s a great thing to watch together. You can cast it onto your Smart TV from YouTube, and I promise you’ll learn a lot about the impact this kind of thinking can have on your family over time.
Awesome. Thanks so much, Richard. I appreciate it.
Thank you, Dave.