How Banks Work
Summary
- When you deposit cash in a bank, you're essentially lending it to them with the expectation that they'll pay it back upon request.
- Trust is a key factor because you rely on the bank to have your money available whenever you need it.
- Banks earn profit by lending out your money and making more from it than you could on your own.
- Keeping cash in a bank account can capture additional upside, allowing for the potential of earning "free profit" from money that is simply sitting there.
Video
How To Take Action
I would suggest starting with understanding how your money works when you save it in a bank. Think of it like you're giving the bank a small loan. They promise to keep it safe and give it back when you ask for it. So, trust is super important here.
Here's what you could do next:
Choose a trustworthy bank: Find one that's reliable and has a good history with its customers. You're counting on them to keep your cash safe and up for the grabs when you need it.
Profit from your deposits: Banks use your money to make more money by lending it to others. When you choose the right account, you could earn some interest – that's like making free money on the cash you're not using.
Go for the upside: Keep an eye out for bank accounts that offer higher interest rates or benefits. This way, you're getting the most out of your idle money. It's not the main way to get rich, but every little bit of extra cash counts.
Remember, this is a small step. It's about making smart choices with your money, even when it's just sitting in the bank. If you do this right, you can start to build up some extra profit without much effort at all. It's smart, it's simple, and it's something you can set up quickly to start growing your wealth.
Quotes by Alex Hormozi
"when you put money into a bank you don't actually put money into a bank"
– Alex Hormozi
"you lend the bank your money on the hopes when they give you a receipt it means that they owe you money back in the future"
– Alex Hormozi
"you're trusting that the bank will have it in the future and have it immediately available for you"
– Alex Hormozi
"they make their money on lending the money out to make more money on your money than you would make on your own"
– Alex Hormozi
"if you can capture more upside by leaving the cash in the account then you can just make money with the money that's sitting there"
– Alex Hormozi
Full Transcript
when you put money into a bank you don't actually put money into a bank you lend the bank your money on the hopes when they give you a receipt it means that they owe you money back in the future now during that time you're trusting that the bank will have it in the future and have it immediately available for you and up for them they make their money on lending the money out to make more money on your money than you would make on your own the idea is if you can capture more upside by leaving the cash in the account then you can just make money with the money that's sitting there not as a primary strategy but it's just free profit
