Old Money vs New Money – Don’t Envy the Filthy Rich (Here’s Why)

Let’s break down the main differences between old money vs new money hierarchy in today’s society and decide if it even matters anymore

In the world of finance, there are two kinds of wealth – new money vs old money. Not only does this tell you about how a person got their money (generally), but it influences their social status as well.

Each has its pluses and minuses in how it fits in today’s wealth structure. As it’s hard to have one without the other, and the states are fluid as well. Let’s dig into the differences between these two money archetypes and discuss if it’s even important.

old money vs new money - don't envy the rich

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What is new money?

Nouveau riche is a french term used, usually used in a derogatory way (By the old money families), to describe those whose wealth has been acquired within their own generation, rather than generational wealth.

It’s when their newfound wealth has allowed them to conspicuously jump social rungs. So instead of being the big fish in the little pond; they are now the little fish in the big pond – social outcasts for a few generations (until their money is considered old money).

New money is the product of recent fortunes, usually from business ventures. Think Bill Gates, Jeff Bezos, Elon Musk. Prior to sticking it big, they didn’t have a prestigious family name or pedigree as some call it. But their future descendants may.

What is old money?

Old money is the product of old fortunes, usually from family businesses, that have been passed down through generations. Think the Rockefellers, the Vanderbilts, the Kennedy family, the Post family, the Du Ponts. These families are typically North Easterners.

These are families that got in on the beginning of an industry – steel, oil, railroads, even political dynasties. They may have started as blue-collar workers, but they grew their business into an empire and made their fortune. They have probably since divested their original business, and now earn income from their investments only. Or their wealth is in their assets (real estate, business holdings, investments).

Sometimes old money families can be house rich and cash poor. This was similar to situations in England when old aristocratic families had to marry newly rich women from the US (much to their disgrace), to bring funds into the family name to support their old castles and family lifestyle. These families tend to be the most traditional and influential in society, they are what is generally known as the Upper Class. They run in the same social circle and tend to exclude new money families. They call them nouveau rich.

A great example would be the story of The Great Gatsby by F Scott Fitzgerald. The main character, Jay Gatsby, was a self-made millionaire (new money) but he wanted to run in high society to be with Daisy Buchanan, part of an old money family.

Modern day old money families

I know that the concept of old money vs new money may seem outdated, but I can assure you it’s alive and well. The perfect example of a modern battle between the classes (and even among themselves) is the book & movie Crazy Rich Asians.

The author Kevin Kwan wrote about his own family and the excess and struggle within the old money circle of Singapore. The fashion, the spending, the assets, the social structure – it’s fascinating!

Check out the below video on Asia’s wealthy & elite.

Which is better for the economy – new money or old money?

There is no definitive answer as to which is better between old money vs new money. It takes both to make the world run.

From a financial standpoint, new money people are the forces that keep our economy changing and evolving. It keeps businesses and economies from getting stagnant; which is a good thing. The businesses tend to be more forward-thinking, while old money businesses tend to be in tried and true industries.

New money is mainly found in occupations such as technology, sports, entertainment, and such. These include tech billionaires, athletes, movie and tv stars, and anyone who got wealthy from a business they started. Think Silicone Valley tech for example.

Yet, you couldn’t have new money business succeed if the old wealthy family industrialists hadn’t built the foundation. Having both types provides stability and diversification to the economy. Just as with a stock portfolio, you need to be balanced, both exciting stocks and “boring” bonds.

What’s better personally – new money vs old money

From a traditional standpoint; people tend to talk bad about the upper class, the old money folks They are stuffy, out of touch with reality. Yet, people still strive to become part of that social class. To “make it” socially so to speak.

There are some good points to being part of the old money circle – you have access to more resources, such as social clubs, education, and other opportunities that aren’t available to those who are new money. Yet old money people can take their money for granted, especially newer generations that didn’t have to work for it. They are “entitled rich brats” who have everything handed to them, as some would say.

New money families tend to donate a good portion to charity. For example, Bill and Melinda have given more than $36 million to their foundation personally. Their foundation has paid out more than $60 billion in grant payments.

Differences in spending habits:

Old money families tend to focus on inherited wealth preservation. Yes, they may have their yachts and their mansion in Martha’s Vineyard but they don’t tend to talk about money or spend money frivolously in large shopping sprees.

For the new money families; they don’t have any of the old luxuries so they have to buy them; sometimes all in one go. Thanks to social media, people see celebrities spending thousands on shoes, millions on parties, and billions in a year.

Now, I’m not saying they’re wrong/bad for it. But the way social media showcases these instances, it’s not in the best of light. Besides, we don’t know their finances, they may well be very financially responsible. They could be multi millionaires, so spending thousands on an outfit may be .00065% of their income for the month.

Yet, that’s not how it’s generally viewed. Even the old money guard would call this kind of displaying of wealth vulgar. And that’s one thing that the old money strives to never be.

For example, Michael Jackson was a top earning celebrity for decades. Yet at the time of his death in 2009, he owed somewhere between $400 – $500 million.

Nicolas Cage is rumored to have blown his entire $150 million fortune. While Mike Tyson had a $400 million career but filed for bankruptcy in 2003. Let’s not even go into the number of lottery winners that go broke! Websites disagree on who exactly, but they all agree that a large percentage end up filing bankruptcy.

The richest families in America – new money vs old money

For the sake of continuity, I’ve taken these three lists all from Forbes articles.

Some of the prestigious old money families and their net worth

Here is a list of some of the old money families from Forbes, that you might be familiar with…

  1. 1802: Du Pont family, $14.5 billion
  2. 1841: Mellon family, $11.5 billion
  3. 1858: Rockefeller family, $11 billion
  4. 1864: Donnelley family, $1.6 billion
  5. 1865: Cargill /MacMillan family, $45 billion
  6. 1865: Milliken family, $4.4 billion
  7. 1865: De Young family, $2.5 billion
  8. 1870: Brown family, $12.8 billion
  9. 1873: Coors family, $4 billion
  10. 1873: Haas family, $3.7 billion
Mary Astor quote on the rich

The wealthiest new money families in the US

While the dollar figures continually change, the current richest families according to Forbes are…

  1. The Walton Family – $247 billion – Walmart
  2. The Koch Family – $100 billion – origin in oil
  3. The Mars Family – $94 billion – candy
  4. The Cargill MacMillian family – $47 billion – global food corporation
  5. The Lauder Family – $40 billion – makeup Estee Lauder
  6. The SC Johnson Family – $37 billion – consumer cleaning products
  7. The Edward Johnson Family – $36 billion – wealth management
  8. The Cox Family – $34 billion – media & automotive
  9. The Pritzker Family – $32 billion – hotels & investments
  10. The Newhouse Family – $30 billion – magazines & newspapers.

Richest people in the US right now (all new money)

Forbes also puts out their richest people rankings…

  1. Elon Musk – $190.5 B – Tesla, SpaceX
  2. Mark Zuckerberg – $134.5 B – Facebook
  3. Bill Gates – $134 B – Microsoft
  4. Larry Page – $123 B – Google
  5. Sergey Brin – $118.5 B – Google
  6. Larry Ellison – $117.3 B – software
  7. Warren Buffett – $102 B – Berkshire Hathaway
  8. Steve Ballmer – $96.5 B – Microsoft
  9. Michael Bloomberg – $70 B – Bloomberg LP

The future of old money & new money families?

It’s interesting to note, that the old money families are dying out. Which, makes sense if they’re not investing it correctly, or spending too much.

According to CNBC, “a market research firm analyzed the state of the world’s ultra-wealthy population – or those with a net worth of $30 million or more. (The report, which is based on 2018 data.) Of those folks, 67.7% were self-made, while 23.7% had a combination of inherited and self-created wealth. Only 8.5% of global high-net-worth individuals were categorized as having completely inherited their wealth.

In fact, Nasdaq reported that the old money families are dying out. This is mostly thought of due to the future later generations not having a profound connection to the fortune, or appreciation for how it was earned, or the desire to preserve it. More on this below.

But of course what was once new, eventually becomes old. So the new exciting cutting-edge tech giants, may well indeed be thought old, stuffy, and out of touch in another 60 years.

So the framework of these different groups remains but the players shift. Old money moving out, new money moving to old money status, and new players emerging in the new money group.

It’s important to note that there are some gross generalizations in this piece. Not all old money people are snooty and not all new money people are irresponsible. We’re working off of the generally accepted perception of these two groups. Remember perception is the viewers’ reality, and history and media have shaped our views as a society into what we discussed above.

Stealth wealth the new trend in personal finance

It’s interesting to know about the new stealth wealth trend, people on the opposite end of both old money and new money families. Remember, stealth wealth is when you fly low under the radar with your spending, you don’t want people to know how much money you have. So you live in a regular house, drive a regular car, but you’re a millionaire.

It’s counter to both money groups in that the old wealth families has riches that everyone knows about, with huge houses built long ago. While new money families spend a lot, consuming goods at a fast pace.

Don’t envy these rich families – here’s why they’ll go broke

It’s so easy to get caught up in the envy game. Wouldn’t it be nice to laze by the pool with a frosty beverage and 20 piles of money? Yes, and no.

The main reason that you don’t want to envy them is that pretty soon, they will most likely lose all their money. Reuter’s reports that “90 percent of wealthy families lose their wealth by the third generation.”

70 percent in the study’s cohort “has an unreasonable expectation of how much they can withdraw and still have the money last – nearly a quarter would be bankrupt in their own lifetime if they were left to spend at their desired rate. Another 20 percent have no idea what level of distribution would keep them comfortable forever. Only 16 percent correctly pegged a distribution rate in the range of 1-3 percent per year for sustainable wealth.”

In today’s economy, these people end up going broke. That sucks. Or worse yet, they’re involved in shady business. Let’s look at some of the filthy rich who’ve lost it all.

  • The former billionaire Vijay Mallya was a prominent liquor tycoon known for his extravagant partying. He also owned an Indian airline company Kingfisher Airlines, which is now gone.  He’s accused of “bank fraud and money laundering charges of approximately $1.3 billion. Mallya’s net worth is gone after a bankruptcy petition was used to recover $1.15 billion in owed funds. 

  • Sean Quinn was once the richest man in Ireland before he lost it all. Because of bad investments in an Irish bank, Quinn was forced to hand over most of his $2.8 billion fortune.

  • Jocelyn Wildenstein was rumored to spend $1 million a month on lavish purchases. In May 2018, the socialite declared bankruptcy desipte getting $2.5 billion in a divorce settlement.

  • Elizabeth Holmes had a net worth of $5 billion, but her blood-testing company, Theranos, was highly inaccurate. Holmes was charged with wire fraud in June 2018 and has a current net worth of $0.

I personally think it would be worse to be rich and lose it all vs living a regular middle-income lifestyle, but that’s just me. They can keep their billions and their soon to be shattered life.

The stories of old money families

Reading about the gilded age can be a lot of fun, we live vicariously through their lavish parties. New York high society at its finest definitely has an appeal. So if you want to learn more about some of these famous families (and a modern one) here are some great places to start.

At the end of the day

In the end, it’s not important what group of the “haves” you’re in (or looking at from the outside). But it’s important to realize that both groups have a place in helping our economy. We need stability, yet we also need growth from new ventures.

One cannot survive or flourish without the other. This can be seen with many different opposing groups that people have labeled good and bad, or better and worse. Wealth building is just as important as wealth preservation. Old money is just as valuable as new money. I hate to say it, but they’re both right.

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  1. Interesting read. When I was growing up, I remember these strange ideas about rich people. I thought that the wealth only circulated in that tiny pool. I love the fact some so many other people have achieved wealth. It shows children who may have the same mindset as me that attaining wealth is possible, and the pool is more extensive than we can imagine.

    I would hate to achieve wealth and know that it is gone by the 3rd generation, and one thing that can contribute to that loss is spending. I am old school; I believe it is not how much you make; it’s how much you keep. If you give your children everything and they work for nothing, they will value nothing, and the 3rd generation can definitely lose that wealth.

    1. I totally agree with it being “how much you keep”, the 3rd generation isn’t connected with how hard others worked for that money, it doesn’t mean anything to them so they spend it like crazy!

  2. I believe that it’s true that without the old money from these rich families the new money would not exist. Old money is good because it helps bring new companies as well as the new money helps bring new jobs and further us in the future.