Old Money vs. New Money: What's The Difference?

Old money vs new money is a debate almost as old as human civilization and one that’s taken center-stage in economic discussions of recent decades.

Wealth is a complex construct, and understanding the many intricacies of the world of finance can vastly improve your financial planning and management skills. With that in mind, we’ve decided to tackle the age-old question you might have wondered about before: what is the difference between old money and new money, and how do the two types of wealth stack up against each other?

Read on as we dive into a detailed comparison and show you some practical examples of both.

What Is Old Money?

While you may have heard of the phrase "old money rich," you may not have intuitively understood its meaning. Simply put, old money is wealth that's generated, sustained, and passed through families over multiple generations. The term is also used to describe those families and individual members of a lineage. For example: "Anderson Cooper's old money — he's a Vanderbilt."

Now, old money rules change depending on many factors, many of which aren't strictly financial. Whether you're old money or not depends on the historical era in question, as well as your general location.

For instance, today, European old money families are mostly nobility — royals, and aristocrats who have accumulated wealth and hereditary titles. The most famous example is the British Royal Family, and to a lesser extent, the Rothschilds.

On the other hand, old money examples change drastically as soon as you cross the Atlantic. In America, families considered old money would be relatively young by European standards. And that is only natural, considering that the United States is younger than many of Europe's royal bloodlines.

While some of those families were already getting busy amassing significant wealth, Columbus had only just been discovering the American continent — one of the many reasons why Americans haven't historically thought much of royalty and titles. Instead, their old money families reached financial prominence more recently through companies built on successful commercial ventures.

The Rockefellers are the most famous example of old American money, having obtained massive wealth through their oil ventures started in the 19th century. The abovementioned Vanderbilts amassed (and subsequently squandered) a considerable amount of money from their 19th-century railroad empire.

To us mere mortals living from one paycheck to the next, these differences may look cosmetic and pedantic — but they’re incredibly important when it comes to the social contextualizing of wealth.

What Is New Money?

As you might have assumed by now, “new money” refers to more recently obtained fortunes. Think Internet celebrities, pop culture icons, famous contemporary entrepreneurs, football and NBA players, and similar wealthy individuals that don’t rely on their family’s wealth. Instead, they’ve amassed most of their fortune during their lifetime.

And just like with old money, new money is also used to colloquially describe the people who possess it — “Steve Jobs was new money; born into a poor family and went on to create a hugely successful company.”

Much to the chagrin of people who pride themselves on an old money lifestyle, new money is frequently richer — and thus frowned upon by the former group. It is often characterized as being without prestige, class, traditions, and values that come with families who have enjoyed their wealth for generations.

Interestingly enough, even though it's frequently larger, the wealth of new money tends to be less respected and seen as less worthy. While Rockefellers and Vanderbilts have prestigious institutions carrying their names, people like Jeff Bezos are simply seen as individuals with lots of money.

The fact that he’s vastly richer compared to pretty much any old money heir is irrelevant — the older elites of the society consider him to be — ironically — a member of a lower class.

New Money vs. Old Money: The Key Differences

There are plenty of differences between old money and new money, but most of them come down to how they’re perceived in society, how the wealth is distributed, and how it is spent.

Source of Wealth

As mentioned above, old money consists of wealth passed down through multiple generations, while new money is most frequently earned by its current holder. In North America, old money families are mostly descended from early industrialists and monopolists, sometimes infamously called "robber barons." On the other hand, the new money class is filled with entrepreneurs, pop stars, athletes, and other celebrities.

Interestingly enough, there's no default number of generations or years that wealth needs to go through to be considered old money. It’s more certain old money characteristics and the fact that the money wasn’t made “overnight” that make the difference.

Social Standing

Social standing is another point of contention when it comes to old money vs. new money. For old money, prestige is about far more than the number of years they've been wealthy. Rather, old-money families enjoy long-standing prestige — the ranks of every old money family are filled with influential, respectable, and highly educated individuals.

Conversely, new money families take pride in an (often over-dramatized) rags-to-riches story. They don't come from a proud and prestigious lineage, making their success far less likely and more impressive. Their success in entertainment and business brings them fame with middle and low-class individuals but less respect from their old money peers.

In the United States, WASP-y high-class East Coast families and wealthy southerners are often viewed as the old money, while the more racially and culturally diverse West Coast families rise through the ranks as new money. There are no concrete rules, though, just trends we can observe.

Spending Habits

Over the short term, perhaps the most noticeable difference between old rich vs. new rich is how they spend their wealth and how that wealth alters their lifestyle.

The stereotypical old money family is more frugal than its new money counterpart — old money habits include a different view of their wealth. Generally, old money people see their money as family money — something to be increased, preserved, and carried on.

While they don't shy away from a lavish lifestyle, it tends to be less flashy, more private, and better planned out — all in an attempt to pass down as much wealth as possible to the next generation.

That being said, that’s just one stereotype and not representative of the whole picture. It also doesn’t mean that old money families don’t drive nice cars, buy high-end luxury clothing, and indulge in ridiculously expensive homes. There are new money individuals that have shown amazing financial restraint, such as Bill Gates, and old money families that have completely squandered their fortunes, like the Vanderbilts or the Guccis.

Still, families that have had money for generations tend to display their wealth far less openly. On the (carefully managed) outside, they might seem to be nothing more than the high end of the middle-class spectrum — but the inside story is often vastly different.

In comparison, the spending habits more frequently associated with new money families and individuals are starkly different. Seeing as most new money people have earned the majority of their wealth by themselves, they (perhaps rightfully so) see that money as theirs alone and something worth flaunting.

That’s not to say that they spend all of their money themselves — but they certainly like to be in control of their finances more than deciding “by committee” with their family members. And yes, in many cases, this does mean more frivolous spending on things like flashy cars, luxury yachts, and huge mansions.

The fact that they are no strangers to flaunting their wealth isn’t much of a surprise. Plenty of celebrities and athletes that came by all of their wealth in a single lifetime have also blown it all in a somewhat short time period. From Nicholas Cage, 50 Cent, to the likes of Dennis Rodman and Mike Tyson — while many of them aren’t poor by any stretch of the imagination, it’s safe to say they could have managed their newfound wealth a lot better.

Old vs. New Money: Lessons

What are some things we can all learn from these different wealth classes?

Sustaining Wealth Is Hard

People born into less-than-rich families tend to frown upon old money with disdain — the term “trust fund babies” frequently comes to mind. Disparagingly, old money families are seen as filled with people who have never done an honest day’s work in their lives.

That’s not always the case, though.

Yes, old money is definitely privileged — there’s no question about that. However, sustaining wealth over multiple generations is far more difficult than most people think. In reality, a stunning 70% of rich families lose most of their wealth by the time of the second generation — and 90% lose it all by the third.

Financial irresponsibility becomes far more likely by the time you’ve passed your wealth onto your children and grandchildren. Neglect in family relationships can also play a part in losing hard-earned family wealth, along with poor financial planning.

New money is simply more susceptible to losing their fortune because the financial management of a wealthy estate hasn't been a skill cultivated in the family for generations. Consider all of those celebrities and athletes you've seen squander their newly earned riches just because they don't have old money sensibilities or experience. 

In comparison, families that have been wealthy for more than a hundred years have become more adept at avoiding these common pitfalls, which is precisely why they remain rich after so many years.

And yes, even if you have no plans for etching your family name into as many institutions as the Rothschilds have, it’s worth following the lead of old money when it comes to tips for maintaining your wealth.

The Bottom Line

At the end of the day, what do new money and old money titles and differences have to do with the “common folk” of the middle and low classes? In today’s world, new money skills are arguably more useful when it comes to obtaining wealth — but it takes old money life habits to maintain that wealth throughout your life and pass it onto the next generation.