We all have come across these terms before. These days, everyone is getting richer by specializing in their field and maximizing the number of people they can provide their service to. And, mostly everyone can afford almost everything today. However, there are many differences between old money vs new money.
Old Money – Term describes those who have inherited their wealth instead of earning it.
New Money – Term describes those who have earned the wealth instead of inheriting it.
What is Old Money?
When wealth and money are inherited from ancestors, it is called old money. Old money is also associated with social class and is considered upper class. It is passed from one generation to the other. Good examples of old money are those families who have received wealth in inheritance like the Rockefellers, whose father was a traveling peddler, Cornelius Vanderbilt, whose father operated a ferry in New York.
What is New Money?
New money, also referred to as nouveau riche, is usually in a derogatory way which means new rich. These are those who have earned their money from investments and business, rather than inheritance. In other words, these people previously belonged to a lower social and economic class and now the new money allows their upward social mobility.
Today, we have movie stars, TV stars, sports personalities, athletes, tech billionaires. These all fall in the category of new money.
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Old Money Vs New Money – Comparision
|Old Money||New Money|
|They spend based on tradition||They spend based on trends|
|Usually, long term investments||Usually, short term investments|
|Have a culture of hiding and not showing off their wealth||Have a culture of showing off their wealth|
|Follows rules and etiquette||Does not care about the society and its theatricals|
|Does not require specialized knowledge||Earned through niche knowledge|
|Closed off to new people||Open to new people|
|Tries to make the money last||Aims to make more money|
|Buys things||Buys experiences|
|Almost always has just one type of old money||Have multiple types of new money|
|Does not like change||Embraces change|
Old Money Vs New Money – Explained
Talking about the times of the early 20th century, the upper-upper class was always considered more prestigious even as the new families had more money. During the late 19th century and early 20th century, the nouveau riche flaunted their wealth by building Gilded Age mansions that emulated the palaces of European royalty, while old money was more conservative.
Both old money and new money have equally influenced the world around us. We all know about the famous Downton Abbey and F. Scott Fitzgerald’s The Great Gatsby. New money is recent and they are in the game right now! They are making the money flow and dominating. This is a new money game. Even old money has some stake in the game. But they are playing a very different game. Holding and passing wealth from one generation to the other is quite a skill and takes a lot of effort.
1. Way of Spending Money
The biggest difference between the two is the way they spend their money. The new money thinks that this cannot be taken along when they die, while the old money thinks that they can leave it to their children. New money as opposed to the idea of leaving their money to their children, hence we have seen more rich people donating fortunes to charity, people like Warren Buffet and Bill Gates.
Old money follows rules and etiquette. While new money just does not care about society and its theatricals. They don’t dress for status but instead wear clothes more for comfort. People like Elon Musk and Mark Zuckerberg, more often than not, are seen in casual jeans rather than business suits.
3. Source of Money
New money has earned their wealth mainly with their niche knowledge. Only if you have specialized knowledge, you can acquire wealth. You need to have the skill and knack for business as well. Old money doesn’t require any specialized knowledge. They have an umpteen amount of general knowledge and have mastered the art of communication which keeps them in the game. Their motto is to always be able to hold their end of the conversation, no matter the subject.
4. Money-Spending Behaviour
Not just in spending, they are also different in behaviour. Old money loves to be the host and hold their parties in their homes. Even if they occasionally go out, it will be to their regular favourite luxury hotel and have their same favourite dish. However, new money, on the other hand, loves to dine out and party. If they are spending, they’ll make sure some bottles are popped.
It does not matter what your age is. It is never late to begin chalking out planning so your grandchildren don’t sell off everything that you have worked hard to accomplish.
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Frequently Asked Questions
How many generations are considered old money?
It is estimated that it takes about three to five generations for a family’s wealth or poverty to dissipate, but few say it takes a staggering ten to fifteen generations—300 to 450 years.
What fraction of the wealthy have new money vs old money?
67.7% of the wealthy people are self-made, meaning they have new money. While 23.7% had a combination of inherited and self-created wealth. Among the high-net-worth individuals only around 8.5% of them have got their wealth through inheritance.
How does old money stay rich?
The family stays wealthy because they inherit their financial principles from their previous generation. For new money families who become wealthy, they don’t know how to pass along that knowledge to stay rich.
Is new money an insult?
It’s the perception of each one. Typically, old money families look down on new money families and see them as strangers to an exclusive club of old money families. However, money is money, new or old, it doesn’t matter.
Which generation is the wealthiest?
The Baby Boomer generation (people born from 1946 to 1964, during the post–World War II baby boom) is considered the wealthiest.