Old Money, New Money

What does the phrase “Old Money” bring to mind?  Being from the deep south I think of some Colonel Sanders type tycoon whose wealth dates back from antebellum times.  Or maybe some stuffy family  with a place in Hyannis Port living off the riches generated through the ingenuity of a robber baron patriarch.   Any way you look at it there aren’t many of us who actually belong in that group. Most of us are looking to be “New Money”, building a modicum of wealth through our own cleverness and hustle-ability.

 

Old money and new money have always had a precarious relationship.  Typically old money is purported to look down its nose at upstarts who have attained some recent wealth as the nouveau riche.   They are supposed to consider the newly flush as ostentatious pretenders lacking in good taste.  And with good reason at times, who hasn’t seen a newly wealthy film star or pro athlete make a fool of themselves through ridiculous behavior and silly over the top purchases of mansions and $500,000 automobiles.  Without even listing them I’m sure the names that popped into your head were the same ones I instantly thought of.  Often the new money doesn’t last very long and today’s heroes are tomorrow’s zeroes.

 

The reason for my bringing up new and old money is that I spent the last week with friends that would legitimately qualify as “old money”.   And they were wonderful people, a really fun, friendly and generous couple to hang with for a week of hiking in the Colorado Rockies.

 

One of our friends (he might qualify as old money also, it is hard to say, he does run a family oil business he inherited) told us he was going out to a resort town in Colorado next to Rocky Mountain National Park with his two grown kids and their families and that another couple from our small town was also going to be there.  All of them are avid hikers and in addition this is the town where our “Old Money” friends spend the summer in a family lake house.  Because my wife and I are avid hikers the lure of having five or six fit people to hike with for a week was too much to pass up so I scrambled and found a place to stay in the area and we packed up and hit the road.

 

Once there everything revolved around our old money friends and their lake estate.  It had two houses with six bedrooms and a dock and boathouse.  This was from his side of the family.  His wife’s family had a very similar set up on the coast of North Carolina so the old money’s divided their time between the mountains and the beach and spent the rest of the time in a Denver condo.  Ken, I’ll call him, retired slightly early like I did and has been living the good life ever since.  They have three daughters who are all grown, married and successful.  His wife, lets call her Heidi, was a wonderful host and every evening the entire group of us got together on their back deck overlooking the lake and talked and laughed about our mutual friends and the experiences of the hikes.

Apart from the old money couple and our friend who invited us, and is probably old money himself, the other two couples were definitely new money.  My friend Bill is a self-made millionaire who is a genius entrepreneur worth much more than me and I’m slightly early retired with more invested than I’ll ever need, especially since the small amount of consulting I do more than covers all our family expenses.

 

So, after all that set up what did I learn about old money versus new money?  Here is my take, old money wins!  First there is the whole attitude thing, how you see life.  While my wife and I have an abundance of resources because she ran a frugal household and I made a strong income, we struggle with spending it sometimes.  For instance, on this trip on the way home we stayed in Omaha which is known for steak dinners.  We ordered a steak and as usual split it since we aren’t big eaters but it was pretty pricey at $65 for a single entrée and by the time drinks and tip were added it was over $120.  It was the only expensive meal of the trip and even at that we split one order. But still, it was hard to convince ourselves that it was “OK” to spend that much. Really?  We have millions invested and we don’t feel we’ve got enough to buy a $120 meal?  That’s kind of crazy.  Our old money friends could drop $500 on a meal and not give it a passing thought.  They understand abundance because it has been in their family for generations. We don’t get it sometimes, because our parents grew up in the great depression and squeezed every nickel.

 

Generosity is another trait the old money couple displayed.  By the end of the week both of us new money couples had been invited to stay at their compound so we cancelled our condo’s and moved in.  The extra laundry and food and wine and snacks weren’t given a passing thought by our hosts, they valued the time with friends way more than the extra cost and the nuisance of doing more chores when we were gone.  And yes, they do their own laundry and cooking, no household help at all for them.  They also made me promise to invite a mutual friend who is struggling with cancer to come back with us next year so he can fly fish while we hike.  And they are like this with everyone, we were never their bestest friends when they lived in our small town in Arkansas but they are open and accepting with almost any acquaintance, and treat them like family.  I was so impressed and feel like I need to learn to be that giving myself.

 

Calmness and an utter lack of hurry surrounded our old money friends, they never insisted on having anything their way and never seemed agitated or perplexed.  If the schedule changed they just rolled with it.  Even their expressions were just so calm and peaceful.  In short, they had it together, they weren’t trailing any loose threads.  They honestly seemed to enjoy the moment, all day long.  My wife and I are pretty happy people but in comparison I have to admit I sweat the small stuff way more than I should, which our friends did not do.

 

They were frugal.  OK, I know you aren’t buying that, how can having three houses be frugal?  Well, in terms of their spending versus their assets I maintain they are indeed frugal.  The house was not lavishly furnished, the kitchen was vintage 1970 for instance, and everything was simple and pretty much unchanged from the time their aunt had purchased the house decades ago.  Also they share both family houses with siblings and other relatives.  They did not buy $100 bottles of wine and the food and snacks did not involve caviar or truffles but consisted of hamburgers and baked beans.  The boats were well used and their hobbies were primarily hiking, local town theater, book clubs, sailing in a very small sail boat and golf.

 

So what does old money have to do with you and me?  It is an interesting question.  Most everything we talk about in this space concerns the immediate future of this one generation, it concerns your life.  The future is all about achieving financial independence and maybe retiring early.  However, life doesn’t stop when you achieve FI, and if the past is any guide most of you that achieve FI will end up with three to five times your initial target amount of money later in your life due to the continued compounding of your investments.  So think about it, three to five times your target FI number is serious money!  It makes you a member of the new money crowd.  And since you are going to have a lot of money perhaps there is something to learn from those old money people that have always had more money than they needed.  Things like an attitude of abundance,  natural generosity, calmness and relative frugality in line with the wealth you are likely  to attain.

 

I gained a new perspective last week by spending time with “Old Money” people.  I feel a little embarrassed that they turned out to be so nice and likeable and did not display any of the characteristics that society, in general, ascribes to them.  I chalk up the stereotypes to jealousy, like any form of prejudice, an unfounded and ugly thing.  In the case of old money it is fueled by that little green monster that lives in every person’s heart, envy.  I have done well in life so far and my kids have a good start, maybe there will be an old money future for my descendants.  If there is I hope my family can do it as well as my friends have.