If you want to know all about new money vs old money, this comprehensive article is going to really help.
It explains a lot about new money and old money, what the differences are and some tips to help you.
New Money Vs Old Money
There is a great line in “Back to the Future” when Marty, the teenager who has gone back in time.
He then says to “Doc” Brown, of the ’50s, the word “heavy” (a somewhat slang expression) as it relates to an unusual situation bordering on being very profound.
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Doc Brown responds by asking if there is a problem with earth’s gravity in the future.
A funny scene and one that captures what typically happens between different generations and the use of words and their meaning.
This “generation gap” can also be found between different generations even beyond words.
It can also be reflected in actions and thinking.
Even as it relates to money there can be a generational gap as it relates to old money and new money.
To help understand this generational thinking let us compare money as classified between old and new.
While serving in the military and being my first time away from home, there were a variety of pitfalls that were lurking around each corner.
As a recruit, money was at a premium.
We had a little bit of time to ourselves and the naïveté of this young recruit was on full display as it related to other individuals who had already set foot out into the world.
One of those pitfalls was the weekly poker game.
My get rich quick scheme was to be lucky, bet a lot of money, and win more poker hands than I lost. Unfortunately, my get-rich-quick scheme did not unfold as I had intended.
The reality is I wish that I had a nickel for each sucker bet that I made.
I wanted new money and I wanted it fast.
Definition of New Money
In the world of those who would be defined as rich, there are two ways that they most likely have attained that status of being wealthy.
The first method of attaining wealth is what is classified as new money.
New money is defined as those who did not inherit their wealth but through innovation, hard work, and being industrious, they created their wealth.
Also referred in French as “Nouveau riche”, New money is defined as money that is achieved by an individual who earned it themselves.
The number of wealthy people has skyrocketed. This is due to the advent of technology and the use of the Internet.
These entrepreneurs saw the technology writing on the wall and rode and continue to ride that wave of wealth.
Definition of Old Money
Old money on the other hand is defined as money that has been inherited.
Typically old money was earned by industrious people from the previous generation or generations.
They invested wisely and received a good return on their money. Their lifestyle and their attitude were to be more frugal with their money.
In doing so that frugality has allowed them to preserve their money and pass it on to their heirs who represent a future generation.
13 Differences Between New Money and Old Money
A significant difference between old and new money is how these fortunes were amassed.
Old money may have been through oil and gas, railroads, industry, etc.
New money is through modern technology, use of that technology, entertainment field, etc.
Different industries but the same premise of seizing the movement, taking a risk, and moving forward.
Another difference is the perception that those with wealth have towards their fortune.
For example, old money is thought to be possessed by families who could be defined as the aristocracy of America.
Generally, old money values tradition and the standard methods of getting ahead in society and interacting in society through the avenues of education, refinement, and respecting tradition.
On the other hand, new money is not a result of generational inheritance. It has been earned by the current generation.
As such their story is more of rags to riches.
New money is obtained by first-generation business owners, possibly graduates from higher learning, utilizing their skills or talent, etc.
The social status of old and new money is no better or worse than either one in comparison.
It’s just a matter of fact that the attitudes are different as it relates to money and consequently the different status that is embraced by old and new money.
Another way to look at the differences between old money and new money is concerning time.
Specifically, as it relates to time (the past, present, and future), is generally multi-generational.
In other words, old money, for the most part, just gets passed on from one generation to the next and the next.
With new money the timing factor is different.
New money is about the timeframe of now.
New money is striking while the iron is hot. New money is more about speculation and risk and having those actions pay a significant dividend for them.
A good comparison could be between the story of the rabbit and the tortoise.
Old money is the tortoise, and the activity of the tortoise is slow and steady. While with the hare or rabbit, it is about fast and faster.
The perspective of those that have old money versus those that have new money is also an indicator of the difference between the two.
The perspective of old money is more traditional.
Examples of traditionalism would include staying at the same hotels, resorts, sticking with traditional automobiles, etc.
Old money is more loyal and what has worked for them in the past will continue to work for them in the future.
Another example would be if the grandfather went to an Ivy League school and the father went to that same Ivy League school then the expectation would be for the grandchildren to go to that Ivy League school.
On the other hand, new money, similar to the way that it was obtained, is a perspective from the individual who embraces that wild and free spirit.
It’s not about being formed from a cookie-cutter or fitting into a certain mold.
It is a life and business lifestyle that is outside of the box.
That is what has proved to be successful for them and that is a reflection of their continued perspective and focus and blueprint for success.
Old money and old type thinking was that one never or rarely talked about their financial situation.
Talking about finances, your net worth, and other related financial issues were taboo.
It was private and not for the general consumption of those outside the family.
For new money it is the complete opposite, it’s the attitude if you’ve got it to flaunt it.
The colorful personality of these millionaires and billionaires is their creative, engaging, and exciting personalities.
With the new money, it’s all about flashing your symbols of success.
Those symbols could be the flashy clothes that are worn, the huge residences that are built, the sports cars that stand out in color, etc.
Another reflection of new money and the personality of the individual who is first-generation wealthy is what interests them.
The interests of new money are the excitement, the adventure, the danger, of the present moment.
Examples of their interest that reflect their personality include sitting at ringside during a high-profile boxing match or basketball game.
It is hosting those lavish parties complete with all of the glitz and glitter,
Old money is content to rub elbows with the elite at a polo match or have dinner parties where it is more about etiquette than excitement.
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Speed and picking up the pace equates to new money.
Similar to the speed of the technology they embrace, their pace is non-stop.
There are places to go to, people to see, and things to do.
Their day is driven by calendars and to-do lists that need to be accomplished and then quickly posted on social network platforms; all the while looking at the number of followers that they are accumulating by the moment.
That is not to say that old money is not motivated or is driven by activity.
However, their activities are not on social display, as their private lives, their business lives, and personal financial lives are private as well.
One of the motivational factors of new money and the public display of how their lifestyle is lived out is that they relish the attention.
New money tends to say look at me and see what I have accomplished.
That attitude cannot be discounted as it is what has made them the successes that they are with their boldness and brashness of being in front of people.
Old money is more subdued.
Old money plays their cards close to their vest and they don’t want people to know what their net worth is.
It is again that attitude of protecting what assets they have and not disclosing to anyone what they have accumulated.
It is similar to the adage of walking softly and carrying a big stick.
Old money walks softly and carries a big stick. New money carries a big stick.
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The old stereotype of the traditional wealthy individual is that they have their nose way up in the air.
They look down on other people and can come across as very snobbish.
Often their polished manners portray this stereotype and give everybody else the impression that old money thinks that they are better than others.
New money is not about putting on airs. New money states proudly and boldly that what you see is what you get.
The attitude of new money is they have enough money and don’t need to worry about what anybody thinks about them.
New money is very extravagant.
Their thinking is that the money came fairly quickly and in an easy type manner.
There is an abundance, and more money will come their way.
Therefore, new money casts caution to the wind and frugality is not part of their vocabulary.
A case in point about new money would be an individual winning the lottery or other celebrities who were millionaires one day and subsequently were broke because they didn’t know how to handle their wealth.
Old money has learned lessons from the previous generations of those that passed on their wealth.
Their frugality is to live within their means.
Another differentiation between old and new money relates to being accessible to others.
Old money is very restrictive as it relates to friendships and particularly marriages.
That is why old money always wishes to control marital relationships so that a son or daughter does not marry someone “beneath them wealth wise.”
They don’t want the transfer of wealth to be jeopardized.
Old money almost works within a caste system that if you are not the right pedigree with enough in your wallet then please continue to move on.
New money, on the other hand, relates to the average individual because they are the average individual.
Being first-generation wealthy, they have no boundaries and are accessible to individuals.
They are not concerned about strangers or newcomers coming into their sphere of influence or jeopardizing their wealth.
11. Closed or Open Hand
Additional insight into the differences between old and new money is the possibilities of additional wealth.
Old money grasps their wealth tightly in a clenched fist. Their concern is to keep their wealth and make it last.
For new money, the financial hand is always open ready to receive more and more money.
For new money and the way that they have earned their wealth is based on their perception that the money will keep on flowing in.
Therefore, their hand rather than clenched is open.
12. What is purchased?
Old money and new money are also defined as the way the money is expended.
For the individual or family that has old money, their focus or interest was on purchasing items that were not available to other individuals who didn’t have the financial resources.
In other words, it was almost an attitude of elitism through the purchase of country club memberships that were exclusive and restrictive to those individuals who didn’t have the proper standing.
Old money, outside the trappings of luxury cars, yachts, and excursions around the world, was preserved and rather than being spent was preserved for future generations.
New money has a different attitude, their attitude is almost cavalier.
Rather than leaving it to their children, they take the attitude of spending it now while you can. It’s almost a eat, drink, and be merry for tomorrow we die attitude.
For the tortoise generation or old money, it was always about doing the right thing.
There were rules to follow and if you did not follow those rules, there were consequences.
For old money, rules set the boundaries and the boundaries were to fence out those that did not belong to their financial sphere of influence.
On the other hand, for new money, the rules are thrown out the window. It’s almost the attitude of everything goes and the focus is not on others but themselves.
Additionally, old money is always used to dress the part. There were business suits, and the mantra was to dress for success.
Today, with the new money, it’s not about what you wear but what makes you comfortable.
Therefore, instead of business suits, there are casual slacks and shirts.
Old Money Versus New Money FAQs
Is Old Money or New Money Better?
It would seem that the short answer is that neither old nor new money is better.
Money is to be accumulated but also to be spent.
The major difference in how the money is spent is that new money is earned by the current generation and perhaps spent more lavishly because the new generation individual earned it.
On the other hand, old money is generational or passed on to future generations.
Therefore, typically, the attitude towards spending is the opposite. Old money tries to preserve wealth by not spending.
Should I Try to Preserve My Wealth for My Children?
Yes and no.
There is freedom in having wealth.
That freedom is that you can try anything you like without having to worry about whether you have the money or not.
This can be good or bad.
Warren Buffet said, “…that a very rich person should leave his kids enough to do anything but not enough to do nothing.”
So why talk about old and new money?
One reason may be because it is interesting how the way that people with old money think in comparison with the way that people think with new money.
At the surface, it certainly is a reflection of their personalities and how they have accumulated their wealth.
Perhaps even more importantly though the takeaway from this type of comparison is to decide for ourselves which types of money have more appeal to us and how we can internalize any lessons based on these comparisons.
It would appear that being slow and steady is a little less exciting than being brash and bold in obtaining and spending one’s money.
Of course, there are implications for us as well in our attempts to save and invest our financial resources.
I guess it boils down to whether we would rather be the tortoise or the hare.