Where Does Your Money Actually Go?

You work 40 hours. You get a paycheck. Money appears in your bank account.

Then it disappears.

Some goes to rent or your mortgage. Some goes to groceries. Some goes to gas, insurance, car payments. But where does all that money really end up?

Most people think about money the wrong way. They think: I earned it, I spent it, it’s gone.

But money doesn’t vanish. It doesn’t evaporate. Every dollar you spend ends up somewhere. In someone’s account. Making someone wealthy.

The question is: who’s getting wealthy from your money?

Let’s follow one paycheck from start to finish. You might be surprised where it leads.

The Paycheck Journey Begins

Meet Sarah. She’s 32, lives in Phoenix, makes $95,000 a year. Her paycheck hits her checking account twice a month: $2,885 after taxes. That’s $5,770 per month.

Where does that money go?

Rent: $1,800
Sarah rents a nice 2-bedroom apartment. Her landlord, Mike, takes that $1,800 and deposits it into his business account. Mike has 12 rental properties. He’s collecting about $20,000 a month in rent.

But Mike owes money on those properties. He has mortgages on 10 of them. Total monthly mortgage payments: $14,000. So $14,000 of Sarah’s rent money (and her neighbors’ rent money) flows to the bank as mortgage payments.

Mike gets to keep $6,000. The bank gets $14,000.

First stop on Sarah’s money journey: the bank.

Car Payment: $485
Sarah financed a Honda Civic. Interest rate: 5.2%. Monthly payment: $485. Over the 6-year loan, she’ll pay $34,920 for a car that cost $28,000.

Where’s that extra $6,920 going? To the bank that financed the loan.

Second stop: the bank.

Credit Cards: $340
Sarah carries a balance on two credit cards. Average interest rate: 22%. She makes minimum payments of $340 per month, but most of that goes to interest, not principal.

At 22% interest, she’s essentially paying the bank $340 every month for the privilege of having borrowed money last year. Money she already spent.

Third stop: the bank.

Student Loans: $395
Sarah has $47,000 in student loans. Interest rate: 6.8%. Monthly payment: $395. Over the 10-year repayment term, she’ll pay $54,055 total. That’s $7,055 in interest.

Flowing to the bank that services her student loan.

Fourth stop: the bank.

Insurance: $280
Sarah pays $160 for car insurance and $120 for renters insurance. Insurance companies take those premiums and do something interesting with them.

They invest them. In bonds, stocks, real estate—and they keep the investment profits. Sarah gets protection. The insurance company gets to invest her money and keep the returns.

Fifth stop: insurance company (which invests the money and keeps the profits).

Let’s do the math:

• Total monthly income: $5,770
• Total flowing to banks: $3,020 ($1,800 rent + $485 car + $340 credit cards + $395 student loans)
• Total flowing to insurance: $280

$3,300 of Sarah’s $5,770 monthly income flows to financial institutions.

That’s 57% of her income going to banks and insurance companies.

And we haven’t even counted the hidden costs yet.

The Hidden Banking Costs

Here’s what doesn’t show up on Sarah’s budget:

Mortgage embedded in groceries
Sarah shops at Safeway. Safeway owns 2,200 stores worth billions of dollars. Think they own those stores free and clear? Of course not. Grocery chains carry massive debt to finance their real estate and operations.

When Safeway pays interest on their debt, where do they get the money? From the markup on your groceries. Part of every dollar you spend at Safeway flows to the banks that finance Safeway’s operations.

Mortgage embedded in your morning coffee
Starbucks has 33,000 stores worldwide. They didn’t pay cash for those locations. They borrowed money to build the infrastructure that sells you coffee. When you buy a $5 latte, part of that $5 covers the interest Starbucks pays to banks.

Mortgage embedded in everything else
Your gas station carries debt. Your cell phone company carries debt. The restaurant where you had lunch carries debt. Netflix, Amazon, Target, your dentist’s office—they all have business loans and credit lines.

Every business passes their borrowing costs to customers. Which means you’re paying interest on other people’s debt every time you buy anything.

How much extra are you paying? Economists estimate that 30-35% of everything you buy represents financing costs passed through to consumers.

Sarah spends about $1,600 a month on groceries, gas, restaurants, and miscellaneous purchases. At 35%, that’s roughly $560 per month in hidden financing costs.

Updated math:

• Direct banking costs: $3,020
• Insurance costs: $280
• Hidden financing costs: $560
• Total flowing to the financial system: $3,860 per month

Now we’re at 67% of Sarah’s income flowing to the banking system in one form or another.

The Banking System Wins Either Way

Here’s the part that’ll make your head spin.

Let’s say Sarah gets smart. She pays off her credit cards. She saves up and buys her next car in cash. She pays down her student loans early.

Does less money flow to banks? No.

When Sarah pays cash for a car instead of financing it, she’s pulling money out of her savings account. Money that was earning her 0.5% interest while the bank was lending it out at 5%, 15%, or 25% to other people.

She gives up the interest she could have earned. That’s the “opportunity cost” of paying cash.

Either way, the banking system wins:

• If you finance: You pay interest to the bank
• If you pay cash: You give up interest the bank could have paid you

The bank gets the spread either way.

This is what Nelson Nash meant when he wrote: “You finance everything you buy. Either you pay interest to someone else, or you give up the interest you could have earned.”

There is no third option.

Where the Money Really Goes

Let’s zoom out and see the bigger picture.

Sarah earns $95,000 per year. After taxes, she takes home about $69,240.

Of that $69,240:

• $36,240 flows to banks through debt payments and rent
• $3,360 flows to insurance companies
• $6,720 flows to banks through hidden financing costs in everything she buys

Total: $46,320 per year flows to the financial system.

That’s 67% of her take-home pay.

Over a 40-year working career, assuming 3% annual increases:

• Sarah will earn: roughly $3.8 million after taxes
• Financial institutions will receive: over $2.5 million

The majority of everything Sarah earns in her entire working life will end up in someone else’s bank account.

And here’s the kicker: this is considered normal. This is how the system is supposed to work.

The Question Nobody Asks

When you see these numbers, a question should occur to you:

What if there was a way to capture some of this for yourself?

What if, instead of sending $46,320 per year to banks and insurance companies, you could redirect some of that flow into a system you control?

Not all of it—you still need insurance, you might still need some loans. But what if you could become the bank for a significant portion of your own financing needs?

What if you could:

• Earn the interest instead of paying it?
• Keep the insurance company profits instead of handing them over?
• Build wealth from the very cash flow that’s currently making other people rich?

Most people never ask this question because they’ve never seen the numbers laid out like this. They know they pay interest on loans and earn almost nothing on savings, but they’ve never calculated how much wealth they’re transferring to financial institutions every year.

$46,320 per year.

Over $2.5 million over a lifetime.

That’s your money. Your hard work. Your value creation.

Right now, it’s making other people wealthy.

But what if it didn’t have to?

The Beginning of a Different Way

There’s an old saying: “You can’t manage what you can’t see.”

Now you can see where your money goes.

You can see that banks profit whether you borrow or save.

You can see that insurance companies invest your premiums and keep the returns.

You can see that every business passes their borrowing costs to customers.

You can see that the financial system is designed to extract wealth from people who work and transfer it to people who control capital.

Most importantly, you can see that this wealth transfer is optional.

There is another way. A way that’s been hiding in plain sight for over 200 years. A way to redirect these cash flows into a system you control, instead of a system that controls you.

But first, you need to understand something that’s going to sound impossible:

You finance everything you buy—even when you pay cash.

We’ll explore that idea next.

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This is educational content only and not meant to serve as financial advice. Individual results may vary. Consider consulting with a qualified financial professional before making any major financial decisions.