You may have heard people talk about old money vs. new money before but may not have understood what the fuss was all about or what they meant. A simple explanation is that new money is earned while old money is inherited. But it doesn't end there, as there is a whole lot more to this discussion, and this article will give you all the info you need about old money vs. new money.
Labeling money as old and new goes way beyond simply describing someone's wealth or how they acquire it. The terms also describe how a person spends their wealth and the perception society may have of them.
Compared to the old days, it appears that many people become wealthy overnight, as there are now so many avenues to make quick wealth in the modern world. Compared to the Rockefellers or the Clintons, people see billionaires appear from almost nowhere, like Mark Zuckerberg or Elon Musk.
Consider it this way; there are two sides to wealth and spending— old and new money. But what makes them so different? Why do new money spenders have a more flashy attitude to spending money? And what makes them different from the old perception society used to have about the wealthy?
What Is Old Money?
Old money can be defined as wealthy families who have been rich for several generations, especially families who maintain a very high status in society, even up till now. For example, some old money families include the Hearsts and the Murdochs.
In the United States, many people associate locations like the Upper east side of Manhattan with old money. This is because this side of New York developed earlier than the rest of the city, with major social infrastructure like the museum, Central Park, etc. Therefore, the affluent occupied those areas of the city.
Today, the Upper west side of Manhattan has equally developed, but the old money association still rests with the Upper east side. Other notable mentions include Boston's Back Bay, Beacon Hill, and suburban Detroit's Grosse Pointe area. These are all considered old money examples.
Interestingly, there's some level of irony in what many people refer to as old money. That's because old money today was new money back in the day. Many old money-rich families you see today are descendants of 19th-century industrialists, builders, bankers, etc.
In short, current old money spenders were born into substantial wealth. That means they haven't experienced what it feels like to live without the riches they already have. In most cases, this leads them to be more cautious with the way they spend their wealth, usually following in the old traditions of their parents and grandparents before them.
What Is New Money?
So, what is new money vs. old money? If you consider old money as generational wealth passed down, then new money refers to the wealth that has been acquired by or in the first generation.
New money examples include many prominent corporate CEOs, musicians, entrepreneurs, famous athletes, and social media influencers. Names like Jeff Bezos and Bill Gates are popular examples of new money-rich people.
However, unlike the old money spenders, most new money owners don’t hold back in how they display their wealth. Most old money owners tend to consider the new money spenders to be of a lower social status or class, lacking the mannerism or class required to elevate them to the upper echelons of society.
When talking about new money, a question often asked is, what is new money in banking? Banks collectively create money through systemic interaction, and even the loans they offer end up making new money. According to experts, banks create new money every time they lend money.
What Is the Difference Between Old Money and New Money in the 1920s?
Like the parents and grandparents before them, old money spenders often pass the money and keep it in the family, ensuring that even more wealth is available for the generations after them. On the other hand, new money spenders usually have a more flashy appeal to how they spend their money and don’t hold back with how they showcase their wealth.
You've already read several old money vs. new money examples. However, a common question needs addressing in this old money vs. new money debate; that brings one particular story to mind— the Great Gatsby. If new money spenders are more flashy than old money owners, what category does the Great Gatsby fall in? And why are the differences between new money and old money significant in the Great Gatsby?
In the 1920s, social classes segregated people into different groups. In the book, The Great Gatsby, written by F.Scott Fitzgerald, there appears to be a conflict between new money and old money.
In the story, Fitzgerald portrays new money spenders as being unwise and pretty much reckless with how they spend their money. On the other hand, he portrays old money spenders as responsible people who know how to handle and maintain their wealth.
However, the difference between these two social classes goes way beyond simply how they spend their money. The difference also reflected two separated personalities. The new money spenders appear to be more caring and graceful enough to be willing to share their wealth.
In contrast, the old money spenders tend to be inconsiderate people who are deeply selfish and constantly seeking ways to increase their wealth even if it means 'walking' on others.
That said, Gatsby, from his personality and the way he spent his money, appears to be new money.
Is New Money Better Than Old Money?
Those with new money can be considered to be self-made wealthy people. They've had to grind the hard way to earn their right to be called millionaires. Yet, in terms of social status, they tend to fall short of the level of old money individuals.
Old money spenders are part of the higher or upper-class society by right of birth. As a result, they have a strong influence that goes beyond the ability to own large sums of property and business, as they can influence policies in their favor.
Any American who follows politics can agree that some political ideologies and policies favor the rich, especially regarding taxes. They operate by planting people in strategic positions in the political and economic sectors to protect their wealth.
So, is new money better than old money? Old money appears to have more power, as they use their wealth to influence decision-making in a way that protects their wealth. Plus, they are perceived as less generous. However, new money is less meticulous with handling their wealth but is more generous and approachable.
Another question worth asking is this— why does old money hate new money? Old money considers new money to be of a lower social class. The flashy way new money seems to showcase their wealth also makes them a bit unlikeable to old money individuals.
What Are the Critical Differences Between Old and New Money?
In the previous section, we answered the question: does old money hate new money? New money appears to showcase everything old money finds appalling. Thus, you'll find many examples in old money vs. new money houses or old money vs. new money aesthetic.
Another critical difference between old and new money is that new money individuals tend to spend much more than old money. Old money is more disciplined and prefers saving. Furthermore, new money individuals are more laid back and closer to the general public of perceived lower classes than old money.
New money spenders are usually not used to wealth and end up mismanaging their finances. Additionally, riches typically come with extra burdens that many new money individuals aren’t prepared to handle, with some even losing their lives due to mental health issues.
Moreover, new money spenders aren’t afraid to get their hands dirty. Most of them are raised with a different kind of work ethic, as they struggled against the odds to turn their financial fortunes around. Old money doesn’t require you to get your hands dirty. As most people here are born into wealth, they usually take over already established business empires.
New Money or Old Money—What Does It Matter?
Although it shouldn’t be an issue, you cannot ignore the social perception of new money and old money spenders. But at the end of the day, does the difference matter? Well, the answer depends on how you look at wealth management and anti-wealth in general.
Families that have old money are proud that they can manage their wealth and pass it down to their younger generations. But in reality, more and more of the world's current billionaires are those who made their way to fortune.
In fact, in most cases, society has a lot of respect for those who show the hard work, desire, and attitude it takes to establish yourself financially, especially against all odds. Therefore, you'll find that many people point at such new money individuals as leading examples of what the ideal success story looks like.
Therefore, as the number of self-made billionaires increases, the distinctions between old and new money will begin to lose their significance.
Conclusion
So, do the old money vs. new money labels matter in the modern world? While the titles may describe a person's social standing and spending habits, it shouldn’t matter where a person's wealth comes from, as long as they acquire it legally and through fair means.
The important thing here is that anybody interested in creating and maintaining generational wealth should learn how to adopt the right spending habits and wise investments associated with old money individuals.
Read more: 10 Effects of Inflation
