It’s a lot of fun becoming rich but being rich is pretty fun too. If I had to pick between the two, I’d pick new money. The ride from being in debt to being financially free is amazing. It’s been one of the greatest highlights of my personal life. You did it. You created value and brought wealth into your life. Many minds are spoiled with newly found wealth. Arrogance and egos are dangerous by-products of first-generation wealth.
Let’s break down old money vs new money. So you can form your own opinion. Which would you rather have? Perhaps, there is a middle ground for us all.
First, I must remind everyone of the greatest story ever told on this subject. New money vs old money is captured in priceless literature. The Great Gatsby tells this tale better than anyone. Not a reader? Don’t worry there’s a movie.
West Egg vs East Egg
In the story, F. Scott Fitzgerald uses the town where people live to divide the classes. The new money lives in West Egg, and the old money lives in East Egg. Great trivia knowledge to impress your friends.
What is Old Money?
You know old money. Old money is the wealthy family that lives on the other side of town. This upper-class family always had money. They’ve been rich for so long, no one knows where it all came from. Wealth is inherited by the next generation once they get to age.
Let’s meet Mrs. Old Money. She’s 85 and sharp as a tack. She made sure everyone in the family went to private school. Only the best private schools for the grandchildren. She prefers everyone to go to boarding school, but she won’t make you go.
She revered her upbringing which includes fine school and classes that teach manners. She loathes the lack of etiquette in today’s world. She’s traveled all over the world. She first went to France when she was 12 years old and remembers it like yesterday.
Mrs. Old Money’s house is adorned with priceless treasures. Antiques passed down from generation to generation. She’s also an avid art collector. She’s bought hundreds of pieces of art over the years.
Mrs. Old Money preaches the value of social and civic engagement. The duty and intangible value of creating deep connections with people. She will also tell you every day the value of good habits. Good habits and traditions that have guided the family over the years. Through good time and bad. Traditions are there for a reason.
Old Money Lifestyle
The younger generations are accustomed to living with means and low financial stress. No financial stress. The young generations commonly have trust funds. This varies from family to family. Monthly checks, quarterly checks, or huge payments when you turn a certain age. Any number of combinations exist in the old money world.
Old money likes to vacation and leisure. They take rest and relaxation seriously. Stewards of traditions, summer homes, ski homes, and beach homes are common. They like things in a particular way. They might tolerate an Airbnb, but old money prefers to own vacation homes.
I can’t understate the value of traditions. A huge reason to buy a home in a known vacation destination is about the company. Family friends and the traditions of summer parties underpin the social networks of old money. We summer in the Hamptons because that’s where everyone summers. We summer in Maine because our family before us summered there. Don’t fix what’s not broken.
What is New Money?
First generation wealth. New money describes a person that created wealth for themselves. They did not inherit money from their family. A family that is new money rich did not always have money. Let me introduce you to my friend, Mr. New Money.
Mr. New Money grew up in Pennsylvania. He went to public school in a small farm town near Pittsburgh. His parents both worked long hours. They always stressed the importance of studying and work ethic. They didn’t go to college themselves. They hope that one day Mr. New Money gets a scholarship and attends college.
Mr. New Money attended a state college and got solid grades. After graduating Mr. New Money got a job at a scrap metal company. He worked logistics and helped coordinate deliveries. He became friendly with the owner. The owner liked his quick wit and passion for business.
Mr. New Money continued to impress the owner with his work and this ability to drive growth for the business. Mr. New Money made the owner a lot of money. Eventually, the owner offered Mr. New Money a small equity stake in the company. The offer was contingent on Mr. New Money staying at the company for the next 5 years. A deal known as the golden handcuffs.
A few years later the owner got an offer to sell the company. The owner took the deal. Suddenly, Mr. New Money got a payday. The liquidity from the deal made Mr. New Money a rich man. From a middle-class family to new money rich, Mr. New Money made it. Who knew scrap metal could be so lucrative.
New Money Lifestyle
Mr. New Money falls into the class of sudden money. This new money rich is not what you see in the media. Mr. New Money still has his middle-class spending habits. He’s still risk-averse and careful with his money. He knows from his experiences as a kid how much stress money can put on a marriage. His parents always worried about money.
Mr. New Money had a lot of questions about being rich. What to do with all this money? How do I invest it? Will this change my family? Yes, these are real 1% problems.
The super-rich new money you see on social media. Selection bias leads people to believe this is the majority of new money. It’s not. They’re just the new money people you know about because they clog up your social media feed.
These multimillionaires spend money to look rich. They flaunt their money because they want to be noticed. They want to be significant. They want all their ex-girlfriends to be jealous. They want all their old schoolmates to “look at me now” and relish in their success. Good luck obnoxious new money rich. Don’t spend it all in one place.
New money rich can make you a jerk. No doubt about it. Most new money is more like Mr. New Money. Stealth wealth and still the same old person is the more common story.
Old Money vs New Money, What’s the Same?
Money changes people. Being rich will change your lifestyle and your family dynamics. Old money and new money understand this. They will find different solutions to this problem. They will draw on personal experiences for guidance and perspective. Everyone cares about family.
The rich have a money mindset. Old money uses it to govern decision making. To protect their wealth and grow it for the next generation. New money had a mindset to create their wealth. Relentless drive, insatiable curiosity, and mission to earn money.
What’s the difference?
Please read The Great Gatsby, I can’t contrast social dynamics like Mr. Fitzgerald. I’ll share my personal experiences from the new and old money family I know.
Old money loves traditions. It governs the family calendar and social life. These traditions are often passed down from generation to generation. Traditions and trust funds are a package deal. Traditions provide structure and purpose to family.
The Carnegie family had an interesting tradition. They groomed the grandkids for the family business throughout high school and college. If you got the job, you joined the family business. You became a part of the empire. If business wasn’t for you. You got a check. A big old 10 million dollar check. Have a nice life, enjoy being an artist.
Old money loves traditions. New money families don’t have traditions like this. They’re new at being rich! They enter the social circles of the rich. Like freshman in college, smart, capable, and cautious. They’re practicing being rich.
New money rich people may not have a strategy. They start asking their friends in finance or find a financial advisor. Help! What do I do with all this money?
Old money rich people have a plan. A plan for the portfolio, a plan on distributing money to the family, and a plan to keep it going for generations. There are rules, checks, and balances to ensure no one can screw it up for the whole family.
The best of both worlds
The people living in west egg and east egg have a lot to learn from each other. There is no right way to be rich but there are better ways. If you’re on a mission to become financially independent, you’re hoping to be new money rich one day. Good for you. The journey from having nothing to having enough is fun. It’s a rollercoaster and battle but you’ll love it.
For all the new money rich people and aspiring new money rich people. Please learn from the old money traditions. Look past all the stuffy and pretentious things. You’ll see that old money families talk about money. They talk about education and creating relationships. They know the value in it. They know these relationships open doors of opportunity. This helps the next generation find meaningful work and purpose.
The family portfolio grows as the next generation creates its own wealth. This snowball of opportunity and accomplishments builds generational wealth. It also creates personal satisfaction for the family members doing their thing. Earning money their way. Finding fulfillment for themselves. Those old money families create dynasties.
Those families exist. You don’t hear about them because no one likes a happy news story. That’s boring. People like to hear about drama and the rich losing everything. There’s value in the old money ways. Take the good from it and apply it to your new money.
Old money * New money = Classic Money. Create your own definition of wealth.