First thing people need to understand is that this process is not an either or decision, it is an in addition of decision. What this means is that whatever you are doing or you want to do financially, implementing your personal banking system will make it more efficient.
What are the reasons to adopt a personal banking system?
Some of the many reasons are: It will set you on a retirement fund creation course without even thinking about it since this is a safe and practical long term strategy.
It will provide you with a measure of control over your money, your expending decisions and results. It will become a tool you can rely on it for a lifetime to access it when in need and to take advantage of investing opportunities.
It will provide you with an effective method to recapture financing costs, which includes fees, penalties and interest, some of the mayor causes of modern slavery and impoverishing people.
It is a decision and a prove of love. When you set your own personal banking system is because you are thinking on improving your lifestyle and the lifestyle of the ones you love. This process will guarantee that at your demise, no matter your age, your loved ones will receive funds to cover the expenses caused by your funeral and to support them for some time (months, years) after you are gone.
No other arrangement works as good as this one since the funds your loved ones will receive are greater than what you have accumulated and are delivered to them tax free. Also hopefully a lesson of sound economics will be inherited by your beneficiaries.
Besides the benefits that are known to the regular permanent life insurance, of being able to use the cash value through withdrawals or loans, the concept of the personal banking system, designed by Nelson Nash in his Infinite Banking Concept, expand on learning and taking advantage of banking strategies like paying yourself interest at a higher rate than the one you owe in the loan. In this way you benefit from arbitrage (the difference between the interest you set to pay your loan back and the interest you are charged in the loan equals your profit).
Velocity of money: by learning to use your bank (policy) to finance as many of your needs as you can, you will find yourself making several payments at the same time to your bank, and that will increase the efficiency of the process.
The fact that you are the owner of your bank, the receiver of those payments, allows you control over the money and makes you the beneficiary of the Volume of interest which is almost double the nominal interest and it is never disclosed by the financial institutions.
Why do I need a personal banking system if I am already saving for my retirement in my 401k, Self Employment Pension, IRA and the likes?
The main reasons are control, liquidity and efficiency.
1- Even with a self directed IRA, Self Employment Pension or 401k, your control is limited due to restriction, rules and constant changes by the real beneficiary, the government.
2- Liquidity: you have no access to your money in those qualified vehicles unless you pay a penalty and taxes every time you use it. Very few exceptions are allowed and many rules apply.
3- The fact that you have no control and you have an almost certain possibility of having to pay a higher tax than the one you are deferring, makes them nerve challenging experiences.
Therefore to summarize and to answer questions to the many investors in real estate, precious metals, commodities, forex, etc. that concentrate on the return on your money, the use of a personal banking system in combination with any of those will improve the results.
The reason for my claim in the past paragraph is that none of those investments allows you to recapture your lost opportunity cost, neither provides for a platform where the earnings can grow tax free. When you implement financing (your personal banking system), with an investment, it will always get you better results than the investment by itself.