The Accumulation Trap: Why You Must Keep Your Money Moving!

accumulation trap

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money trap“I want my money to be like a river, not like a pond.”

– Lisa Sasevich, Inc. 500 business owner

Accumulation does NOT equal wealth and prosperity.

Traditional financial planning teaches us to: accumulate first, then disburse. The goal is to save and invest to accumulate ample assets. Then someday, when you accumulate “enough” money in your accounts, you can stop working, begin the distribution phase, and live off of your assets (or the interest your assets produce.)

In my book, Busting the Retirement Lies, I detail why this “accumulation trap” thinking is so harmful. Today, I just want to look at one piece of the formula: the idea that accumulating money should be our primary financial goal.

Accumulation is the goal of most investors. Everybody desires to have enough money. People strive to accumulate enough money so they either won’t have to worry about it, or they’ll at least never have to move in with their kids!

But the “Accumulate first, then disburse” model is dangerously FLAWED.

A Closer Look at the Accumulation Trap

  1. It relies on guesswork and speculation.

How do you know you’ll have “enough” money? Well, typical financial planning relies on solid mathematical formulas—using numbers that are nothing but speculation, generalization, extrapolation, and GUESSWORK.

  1. CASH FLOW is what we actually live on.

Many people are AFRAID to spend their principle! People accumulate many thousands, perhaps even millions of dollars, but are afraid to USE their own money.

You’ve heard it said, “It doesn’t matter how much you make, only how much you KEEP.” But the truth is: It doesn’t matter how much you make or how much you keep. What matters is how much you can SPEND after you’ve earned it and saved it! If the purpose of accumulation is to provide income in later years, why not concentrate on strategies proven to generate cash flow?

Typical financial planning tells us to accumulate the biggest possible pile of money. We work hard and throw a portion of our income into 401(k)s, IRAs, perhaps a taxable brokerage account, and a 529 plan or two. Accounts that can only be used for limited purposes at specific times. Accounts we can’t access without paying taxes, penalties, perhaps even fees.

Meanwhile, the financial institutions and even the government benefit from the accumulation. They leverage it, tax it, or collect fees for sending us quarterly statements letting us know how “our” money is doing. They may even keep a portion of it when we die.

  1. Accumulation isn’t an effective wealth-building strategy.

Accumulating money keeps it stuck, trapped, and inefficient.

How to Escape the Accumulation Trap


Move money THROUGH your assets, not just TO them.

Money is a lot like water. It stagnates when it sits. It becomes unproductive, useless, and goes to waste.

Just as LIFE depends on the movement of water, so does PROSPERITY depend on the movement of money.

You may be aware that consumer spending—movement of money—makes up the MAJORITY of our economy. But we’re not trained to move money in our personal economies, we’re taught to accumulate it and let it sit in various types of accounts.

Savvy business owners, corporations, and bankers know how to keep money in motion. If banks acted the way we are taught to act, they would keep all of their deposits sitting in the vault unused. And they’d go out of business, unable to compete or turn much of a profit.

Banks USE money. They leverage it, multiply it, and generate enormous profits from it.

Moving Money THROUGH Assets

Whole life insurance allows for money to be moved through assets. Infinite Banking, a concept popularized by author Nelson Nash, teaches this very principle: to move money through assets such as whole life insurance. Moving money increases its velocity and accelerates wealth-building.

Visit Infinite 101 to discover the wealth building characteristics that permanent insurance provides.

-Kim Butler

Read: The Whole Truth About Whole Life

Watch: Getting Ready to Retire at Any Age

Listen: The Wealth Standard Radio Show

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