Are you familiar with the terms “old money” and “new money”?
Essentially, old money signifies generational wealth and is defined as “the inherited wealth of established upper- class families or “a person, family, or lineage possessing inherited wealth. The behavioral patterns amongst this group are much different since they are accustomed to wealth as it has been maintained for many generations. On the other hand, new money refers to wealth that has been recently acquired, typically within the first generation. Often times, those with new money are much more inclined to spend their money at a faster rate than those with old money. When it comes to analyzing the consumer behavior between these groups there are some major differences that influence the way they spend. Here are some key characteristics that depict consumer behavior and spending patterns between the two groups:
Old Money Habits
- They are frugal when it comes to their spending habits. Material possessions do not depict their worth.
- Philanthropy is highly valued
- Prioritize saving and long-term investments
- They live below their means and frown upon living on borrowed money
- Financial autonomy is worth more than status
New Money Habits
- They spend money in order to attain social status
- Prioritize spending over saving and investments
- Tend to live above their means and/or on borrowed money
- Value expensive possessions and depreciating assets
- Unable to sustain s luxury lifestyle without working
Within the spectrum between old money and new money, which group do you identify with the most? How do these characteristics affect your behavior as a consumer?