You’ve heard the term “old money,” but what does it mean? And if there’s such a thing as old money, then what is “new money?” And what’s the difference between the two? Let’s dive in and learn more about old money and new money.
Table of contents
What is Old Money?
Families with old money have inherited their wealth. In most cases, the money has been passed down for numerous generations. According to Clever Girl Finance, the old wealthy families in the United States include the Rockerfellers, Gettys, and Vanderbilts. Other families of old wealth include the Agnelim in Italy and the Wendels in France.
What is New Money?
New money is also referred to as the nouveau riche (or “new rich”). These people did not inherit money but earned it themselves. They are often considered self-made billionaires or millionaires.
These individuals and families often have a different kind of background than those with old money and may have grown their wealth via emerging industries too. They often come up in the fields of technology, entertainment, and sports. The term nouveau riche also describes anyone in possession of an immense and recent amount of money, including entrepreneurs.
Behavioral Differences Between Old Money vs. New Money
The key differences between old and new money are spending habits, social perception, and whether the wealth was inherited or earned.
The easiest way to determine if the money is old or new is to look at the source. If the money has been passed down during the course of many generations, it is old. If earned recently, the wealth is considered new.
Many of the families living in the United States with old wealth descended from the early industrialists. New money is more common among entrepreneurs and celebrities. There is no specific number of years money must be passed down for wealth to be considered old. The status is determined by a variety of distinctions.
Saving and Spending
Families inheriting great wealth save their money and strive to ensure it remains in the family. As new generations are born, they inherit money from the investments and savings of previous generations, which often amounts to millions.
While old wealth is usually saved, the same is not true of new money. People with new money often donate to charities and spend lavishly with little regard for future generations.
A good example of old money is the owner and founder of Walmart, Sam Walton. According to The Richest website, he was raised in a family possessing old wealth.
When Walton passed away, his family was worth approximately $23 billion. This wealth was saved and passed on as new generations were born.
The majority of individuals with new wealth do not amass a large fortune upon their death. This is because there is a much higher likelihood they will spend or donate most of their income throughout their lives. Those with new money put in the hard work necessary to climb the ladder to the top. They are not accustomed to having money at their disposal. This means planning and saving for the future is often more difficult.
“One common financial planning challenge among people with new money is the temptation to spend lavishly and show off their wealth. This can lead to debt and financial problems down the road,” says Becky Neubauer, founder of Lifepothesis.
“Another challenge is not having a clear plan for how to use their money. Without a budget or goals, it can be easy to overspend or make impulsive decisions with their newly-acquired wealth,” she added.
“I’ve also observed that people with new money tend to not be used to dealing with large sums of money and may not know how to invest it wisely. This can lead to them losing money in the stock market or making other poor investment choices.”
Those with inherited wealth have been raised to understand the importance of planning and saving for the future because they have always been rich. They have never had to cope with major financial struggles. This perception gap makes the mindset between old money and new money completely different.
Social Perception
Another key difference is social standing. There is a lot more to old wealth than how many generations have inherited the money. They often congregate in different regions of the country, for instance. Many families with inherited wealth are located in the Northeast, while new money is often linked to the West Coast.
While those with old money are often thought of as more refined and better educated, having enjoyed a comfortable upbringing, those with new money often began poor and struggled for money.
The life story of new money families often resembles a rags-to-riches fairy tale. They became rich due to their talent and success in entertainment or business.
Hushed vs. Loud
Old wealth families rarely discuss money, while new money families often talk about it. Old wealth is taught at a young age, not to mention money. It is almost considered taboo.
There are three golden rules for old wealth. These are:
- Do not spend more than necessary.
- Do not make it obvious the family is wealthy.
- The family will be treated differently if people become aware there is money.
There is a contradiction between taking pride in old wealth and being ashamed of the amount of money passed down as opposed to being earned. This concept is responsible for the way old wealth functions in society. The families do not want to risk standing out, so they prefer to play it safe.
New money is different because it often makes itself highly visible. New money will drive down the street in a pink Ferrari if they are partial to the color of flamingos. They purchase extremely large mansions because they grew up poor and struggling.
According to Alux, poverty leaves scars. The culture in which an individual spends their childhood impacts adulthood. They want to experience everything they have missed out on in the past and often believe money is the answer. They wear wealth as a status symbol to show the world they have become successful.
Spotlight vs. Backstage
New money wants to be in the spotlight, old wealth prefers being backstage.
Families with inherited wealth are extremely protective of privacy. A good example is the status symbol of Forbes magazine. Old wealth will not agree to be featured, while new money will pay for the privilege. Old wealth will spend money to ensure a low profile and remain anonymous. New money screams from the tabloids and on Instagram.
In virtually every traditional culture, old money families believe it is vital to protect their family name. They believe bringing shame to their families must be avoided at all costs. This means their number one priority over everything else is to keep family matters private. They will pay to ensure a clean family image and privacy. New money is generally happy to have personal information in the open because it tells the world they are rich.
Entertaining at Home vs. Out On the Town
One of the most obvious differences between old and new money is entertainment. With the exception of dining at a favorite restaurant to enjoy the same dishes repeatedly, old money has dinner parties at home and invites selected guests. New money tries every restaurant in town and is not concerned with privacy. They want to taste every new dish, experience the ambiance of new places, and say they have had dishes prepared by award-winning chefs. In many instances, they will post pictures on social media showing the food and restaurants they have experienced.
New money tends to celebrate with several bottles of champagne. They have champagne showers in Mykonos, St. Tropez, and Las Vegas, often costing in the vicinity of $15,000. There is actually a trend where new money posts on social media to talk about the amount of money they are spending on a single night out. It is not uncommon for new money to spend more than a quarter of a million dollars. Older wealthy families would not even consider spending this much and are shocked by those that do.
Old Money vs. New Money: Which Spends More Helping Others?
Families referred to as old money often look down on anyone they do not consider to be of the same class. Socialization only occurs among families in the same income bracket.
The same is not true for new money. Generally speaking, they are down-to-earth, willing to lend a financial hand to those less fortunate and have a closer relationship with the general public. The belief of new money is more wealth can always be earned. Families with old wealth simply want to ensure the money lasts for future generations.
New wealth has been accumulated recently, and these individuals are usually in the spotlight. Since their lives have become more predictable, they are willing to spend money. Think of new money as the team playing on the field and old wealth as the spectators with stakes on the outcome of the game. Families accustomed to having wealth have diversified their portfolios according to the advice of financial planners and financial advisors.
These families are not receiving a full return because their intention is not to win the game. Instead, they play a different game of making certain their wealth is not lost. Making certain wealth can continue to be passed to future generations is a rare skill and must be learned and passed on. There is a substantial difference in the ability to earn wealth and the skill to keep it.
One of the best examples of all time is a family living in Florence, Italy. During the 1400s, this was one of the richest families in existence. They are still one of the richest families in the world.
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About the Author
Thomas P. is an avid reader and writer who enjoys studying the history of wealth in America and sharing his opinions in guest posts like this article about old vs. new money. When he’s not judging people by their actions, Thomas enjoys reading The Great Gatsby by the pool while sipping on a Diet Coke.