You've certainly heard the terms "new money" and "old money," but what exactly do they mean? The most straightforward answer is that old money is inherited and new money is earned. However, there's a lot more to it.
The terms "old money" and "new money" refer not only to where a person's riches came from, but also to their spending patterns and social perceptions.
Defining new money vs old money
Let's start by defining what these statuses mean for context!
What is old money?
The term "old money" refers to inherited wealth. When a family has old money, it is typically passed down the generations. "Old money" can also refer to social status.
Old money families are typically perceived to be wealthier than new money families.
The Rockefellers and the Vanderbilts are two old money families who have been wealthy for several generations.
What is new money?
New money refers to someone who did not inherit their fortune but worked hard for it. Those who have accumulated new riches are known as self-made millionaires and billionaires. New money is frequently considered to be a rung below old money in terms of social prestige.
New money households may be considered middle-upper class by some. They're common in industries like sports, entertainment, and technology.
New money vs old money: key differences
The most significant differences between old and new money are their sources of income, social perceptions of them, and spending habits.
The source of money is the simplest way to distinguish it from fresh money. Old money has been passed down the years, whilst new money has been earned recently. Many old-money families in the United States are sprung from early businessmen. Celebrities and entrepreneurs are frequently sources of new capital.
Money does not have to be passed down for a specific number of years or generations before it becomes old and obsolete. Instead, the other distinctions are frequently used to classify a family as old money or new money.
Another distinction between new and old money is the social status of each. There's a lot more to old money than the number of generations it's been passed down through. The Northeast is home to many old-money families. They were regarded to be more educated, elegant, and respectable in the past.
The rags-to-riches story is more common among new-money households. Money was not always plentiful in the household. Instead, they built their own fortunes through business or entertainment. While a family with new money may be just as wealthy as one with old money, they may not be viewed as "upper-class." The West Coast is more typically connected with new money.
One of the most significant differences between old and new money is their spending patterns and how their income influences their lifestyle.
Families with older money are thought to be more thrifty. They've been taught since childhood that their money isn't their own. Their money belongs to their family. They also bear the duty of ensuring that wealth is passed on to future generations.
That isn't to imply that families with a lot of money don't go all out. You can bet they have expensive homes, drive excellent cars, and dress in designer clothes. However, they are more sensible in their spending and regard significant purchases as investments rather than splurges.
You might not know how wealthy an old-money family is from the outside. They may appear to be just like any other family on the outside, and they make an attempt to avoid the limelight.
The spending patterns you may associate with new money are rather different. Families that have received new money are more inclined to consider it theirs to live on rather than to pass on to future generations. New money is sometimes connected with more extravagant spending, such as flashy homes and automobiles. In other words, they have a reputation for boasting about their wealth.
This is unlikely to surprise you. We've all read stories about athletes and entertainers who become millionaires, only to lose everything in a short period of time. Athletes like Mike Tyson and Dennis Rodman, as well as artists like 50 Cent and Nicholas Cage, are some commonly known examples.
New money vs old money: should you really care?
So, does the distinction between old and new money really matter at the end of the day? It depends on your perspective.
Old money families take great satisfaction in the fact that their fortune has been passed down through the generations. In actuality, the vast majority of today's billionaires are self-made.
Entrepreneurs like Amazon's Jeff Bezos and Google's Larry Page and Sergey Brin have built billion-dollar firms from the ground up. While they may not have the social standing of someone who has inherited wealth, there is something to be said for building your own fortune.
The distinction between "old money" and "new money" appears to be less essential as the number of self-made millionaires and billionaires grows.
However, one of the most significant — and arguably most crucial — differences between old and new money is spending patterns. The truth is that squandering money and spending as much as you make does not create riches for future generations. On the other hand, saving and investing sensibly will do it. So, while there's nothing wrong with being called new money, we can all learn from old money's spending patterns.
The bottom line
The terms "old money" and "new money" refer to the origins of a person's fortune, social standing, and spending habits. Is the difference, however, really that significant?
It shouldn't matter where someone's money comes from when it comes to social standing. However, it's critical to embrace the spending habits commonly associated with old money in order to preserve generational wealth.