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The Foundational Skill of....Banking??

Updated: Apr 20



Today on the morning commute to school, my nine-year-old piped up with a seemingly random statement. “I don’t like computers,” he said, “because I’m not good at typing.”

 

“Well let’s work on that,” I reasoned with him. I don’t see a reason to remain handicapped when the remedy is actually quite simple. He just shrugged his shoulders and barreled out the door on his way to morning assembly. 

 

That got me to thinking….not having a mastery of a basic skill is hindering him from thriving in a corner of the world that we interact with daily, and is not going anywhere anytime soon. I think the same could be said of most people in the financial space. Most people delegate that whole area of their lives to “the experts,” because it’s surely too confusing and complicated for the average Joe to understand. Hogwash. We’re just missing a basic skill, and that skill is being able to control the banking operations of our lives.

 

Banking?? Who knew there was a skill to be learned there? You see, we’re all familiar with the process of banking, we’re just not familiar with controlling that process. If our conversations around the water cooler or the neighborhood cookout do broach the topic of finances, they tend to lean towards a discussion of rates of return, or how someone found this great investment that pays 2 points higher than the next guy. That’s all well and good, but what’s missing is a foundational piece.

 

In his research, Nelson Nash, author of Becoming Your Own Banker, found that of every disposable dollar the average American makes, 34.5% of it flows out of his control forever in financing to banks and third party lenders. Now before you decide that’s ridiculous, make sure you’re thinking like a banker. We have to think about interest volume, not just interest rates. Most of us are focused on making tiny improvements on our investment returns, when we could actually move the financial needle in a much more significant way by controlling the way we finance things. Nelson likened it to flying an airplane with a tailwind versus a headwind. We can focus all of our energy on making the plane go a little bit faster, or we can control the environment in which we fly. To do the latter changes everything.

 

So how do we control our financial environment? It seems that so much is OUT of our control: tax rates, interest rates, grocery prices, or whether the stock market is up or down. However, by learning how to control the flow of money in our own personal reservoir, over time we can eliminate the need for outside financing, recapturing the vast majority of that 34.5% that was previously escaping to other entities forever.


“But what if I pay cash for everything?” I can hear you asking. What you have to realize is that we finance everything we buy. We either pay interest to someone else, or give up the interest our money could have earned when we pay cash.

 

So…what if by learning a foundational skill—the skill of banking—we could make everything else in our financial lives more peaceful and more profitable? I’d say the same thing I said to my 9 year-old this morning…Let’s work on that. I’d love to be your guide.  

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