Becoming super-wealthy is a dream for many people, and some do, but there are certain differences in how they acquire that wealth and how they spend their money.
F. Scott Fitzgerald's novel The Great Gatsby perhaps best illustrates the gulf between so-called “old money” and “new money.” While new money, like Gatsby's, may conjure up images of flashiness, frivolity, and extravagance, old money, like Daisy's and Tom Buchanan's, suggests a more modest and conservative way of using and displaying money. It is often reminiscent of
Read next: I'm a self-made millionaire: I followed Dave Ramsey's 3 rules to get rich
Learn more: 6 genius things every wealthy person does with their money
Peter Earle, a senior economist at the National Bureau of Economic Research, said the distinction between old money and new money generally refers to individuals and families with inherited wealth or status, and those who have acquired money more recently through entrepreneurship or business success. It is said that this distinguishes one from those who have acquired it.
He said: “Old money typically comes from inherited property that has been passed down through generations, whether it's land that the original source of funding has held for many years or the creation of some kind of industrial concern.” .
In contrast, new money typically comes from entrepreneurial ventures, successful careers, or innovative business endeavors that lead to rapid wealth accumulation within a generation, he said.
sponsor: Protect your wealth with a Gold IRA. Take advantage of gold's timeless appeal with a Gold IRA recommended by Sean Hannity.
Does it make a difference for the rich?
Dr. Mariano Truss, professor and chair of the Department of Financial Economics at Adelphi University, believes that modern wealth is by no means monolithic, and that there are important differences between the so-called “old” and “new” among today's very rich people. He said there is. ” money.
“It would be an exaggeration to call it a class conflict, but they often don't identify with each other,” Truss said.
Old money primarily comes from inherited wealth, which often spans multiple generations and in some cases can be traced back to Old World aristocrats.
“Old money dresses conservatively and is generally much less flashy than 'new money.' Many in the former group have earned Ivy League degrees and form part of the social elite, he said.
Meanwhile, new money is far more likely to be “self-earned” through speculative investments, entrepreneurship, celebrity and professional sports, he added.
“Although this group includes some of the world's wealthiest people, most members are not considered 'elite' and may or may not have advanced degrees,” he said. Ta. “New money is often flaunted, and this flaunting, which is sometimes known to exasperate 'old money,' is perhaps the characteristic that most distinguishes old wealth from new wealth. ”
However, other experts argued that this social distinction has become less meaningful over time.
“Financialization, entrepreneurship, and the increasing social recognition of merit and achievement have diminished its importance in modern society,” Earle said.
For you: $3 million in retirement savings: Here's how much you can withdraw in a year
What is contrast?
Besides the sources of their wealth, there is a further contrast between old money and new money, or spending and saving habits.
According to a blog post by Myra Wells, “The rags-to-riches stories often associated with new money make people want to show off what they've earned.” She further states in her post that new money may also be less financially literate than old money.
On the other hand, families with older money tend to be much more frugal. According to Myra Wells, this is a habit that arises from the fact that family money has been accumulated over time and generations, so it cannot be spent carelessly.
In other words, as Swiss Money says, conservation and prudence on the one hand and bold spending on the other.
However, this does not mean that New Money members do not invest.
According to an article by Sophie, “famous celebrities, athletes, and businesspeople often invest in real estate or acquire companies to increase their wealth.” “Generally speaking, new funds seeking higher yields may make riskier investment decisions. They are not thinking about generational wealth, which they should protect with proven investment methods. ”
Different paths, same destination: prosperity.
Eric Severinghaus, co-founder and co-CEO of Bloomfilter, says what he calls the “class divide” among the wealthy has become “high-stakes social chess.” Said they were similar.
“Some families with old money may hold on to their exclusive clubs and traditions, while others welcome new money with open arms,” he says. “And while some new money hustlers may work hard to prove they are part of the elite, others may not mind blending into old money circles. I don’t know.”
According to him, whether you have old money, new money, or somewhere in between, it all depends on how you play the game.
“Wealth is just a piece of the puzzle. What matters is how you use it to make a difference, whether it's in your own life or in the world around you,” he said. “From pedigree to career, paths to wealth are as diverse as the people who embark on them.”
GOBankingRates Details
This article originally appeared on GOBankingRates.com: New Money vs. Old Money — Does This Make a Difference for Rich People?
