5 December 2007 1113 views 2 Comments Print This Post  Email This Post

When I was a kid, I used to think the bank is simply a place where you keep your money if you didn’t want to keep it at home. I had no idea how the banks got there and what’s paying for all the employees and their suits. Needless to say, now I know that banks make a lot of money (for the most part). If you take a look at how banks operate, you can learn many lessons from them. After all, they are in the business of handling money and making money, something that we all do every day. If you simply apply some of the things that banks do in your own life, there’s no question you’ll grow very rich. Let me show you how you can get rich by thinking like a bank.

1. Be Precise

Banks deal with money day in and day out. Tellers balance their cash boxes twice or more per day. Every single transaction is double checked then triple checked. Loan documents are so boring and tedious, you’ll feel like you’re in one of those “wanna get away” South West commercials while you’re signing. In short, banks are precise and detailed. They depend on this precision for their very existence. You must be precise in your finances as well. I know things get messy, and trust me I do know, but you have to stay on top of it. Make sure you pay off high interest debt as soon as you can. Don’t let it lag. Make sure you re-balance your portfolio to so you don’t get robbed of potential returns. Don’t get lazy and settle for mediocre returns. Make sure you aren’t paying too much for cable TV, or even food. Build a habit of precision and detail and you’ll be on a road to riches.

2. Pay Low Interest

It’s no question bank savings accounts produce some of the lowest returns on your investment dollar. Banks won’t pay you high interest on your deposits because they want to borrow your money at the lowest rates possible. You must do the same if you want to get rich. You won’t get rich by borrowing from a credit card with an interest rate over 15%. If you’re going to borrow, even a home equity loan is much better than a typical credit card. You have to borrow like a bank.

3. Earn High Interest

I’m sure you notice that loans and credit cards have much higher interest rates than a savings account. Banks take your money that they borrowed low and earn high returns on it. You must do the same in your life. If you borrow at low interest and earn higher interest than your costs, you pocket the difference. It’s called leverage. In the long run you’ll come out on top if you can consistently earn more than you borrow. Jonathan at MyMoneyBlog is notorious for borrowing low and earning high and he took it to the extreme by borrowing from 0% APR credit card offers. If he keeps doing this for the rest of his life, he would accumulate quite a chunk of change. I do this as well, currently I have about $10,000 in loans from 0% interest credit cards that I have spent on marketing for my internet businesses. I’m currently earning profits from that marketing so even when my rate jumps back up to nearly 10%, I’ll come out on top since I am earning more than that cost.

While we’re on the subject of banks making money with our money, and financial leverage, heres another lesson from banks. Don’t get greedy! The banks who sought higher returns by issuing home loans to unqualified people are now wondering why those people can’t pay it back. One word: Duh! They let greed get ahead of common sense. Avoid this and you’ll avoid financial disaster. I’m all for leverage, but don’t over leverage yourself in hopes of lavish returns. Higher returns always come with higher risks.

4. Sell, Sell, Sell.

Bank do a lot of selling. Everyone from bankers, to tellers and managers are looking to make a sale, and some banks are really good at it. They make good credit card offers, home loan offers, and they attract your money with high interest e-savings accounts and so forth. Most of them do it with a warm and friendly smile as well. You have to get good at selling if you want to get rich. If you’re a careerist, you better sell yourself and make sure people know about you, your qualities and your contributions. If you’re an entrepreneur, you better sell your idea to others be it customers or investors. You may even need to sell an idea to your spouse if it’s going to be financially beneficial. You know, doing something crazy like moving to another state in order to significantly reduce costs in order to accelerate wealth building.

5. Get Involved and Give Back

I notice banks sponsor a lot of local community events and they have their employees helping out. You should do the same. There’s no logic behind how giving back will make you rich, but I think you should do it and I do believe that you’ll be a very rich person if you constantly give back and get involved in your community and in the lives of others.

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