The Old Money Book

The first thing almost everyone thinks of when they hear the phrase “Old Money” is the “Money” part of the term. It’s difficult to be Old Money without the cash.

The second thing that comes to mind might be the stereotype of Old Money people being aloof, snobbish, or distant in their social interactions. This is more of a stereotype than a fact. OMGs can elitist, gregarious, shy, galant, blunt, eloquent, or crass. Just like members of any other social class.

It is, however, notable that Old Money personalities are often formed by common experiences. Family history shapes their world view. Boarding school (private education) shapes their character. And, ironically, trust funds often shape their spending habits.

How so? Well, not in the way you might initially think.

Let me explain. A trust fund is a financial entity established and funded by one party (usually parents or grandparents) for the exclusive future benefit of another party (often a child or grandchild).

The trust has its own name, tax identification number (and tax obligations), as well as rules regarding who administers or controls the funds within, how the funds are to be invested, when such funds can be released (when the beneficiary turns 18 or 21 years of age, for example), what purposes the funds may be used for, and perhaps restrictions on what percentage of the principal can be distributed during a given period of time.

This last condition is a common feature in what is sometimes referred to as a “Spendthrift Trust”. Earlier in my life, I was the beneficiary of such a trust, and therefore I was only allowed access to 5% of the total assets of trust in a given year 12 month period.

You may think that having access to predictable monthly or quarterly distributions would make one casual or even extravagant in one’s spending habits (and it sometimes does if the person doesn’t have proper education, guidance, and purpose in their life). More often, however, it makes one appreciate the independence one has. It makes one attentive to the return on investment (ROI) the trust is producing.

It can also make one consider and contemplate the nature and amount of expenditures one makes every month.  This can, put quite simply, make some beneficiaries of such trust become quite parsimonious (cheap is a less flattering term).

In summary, if an OMG can avoid spending money on something this month and put it off until next month, that means that they didn’t spend money from this month’s distribution, and that money can stay in the bank, stacking up in cash or being reinvested to create even larger dividends or net worth in the future. 

Additionally, if an OMG needs or wants to spend money on something this month, then they develop the habit of getting value for their money, whether it’s getting the Volvo’s oil changed to keep it running or finding a new blue blazer because the one they’ve had for twenty years is beyond threadbare.

As I’ve noted before, this leads to a very functional, practical, and longterm approach to almost everything in life. How long is it going to last? How often will I use it? And then the last question…how much does it cost? If you use a blue blazer three or four times a week for twenty years and it’s not exactly inexpensive to acquire, it might still be a good value…as opposed to what many might consider a good deal.

The first balances the longterm benefit overall. The second might have the price weighing in more than it should, impacting quality.

This ‘postponing of expenditures’ perspective also feeds back into the notion of What It Costs To Buy versus What It Costs To Own. An exotic sports car costs a lot to buy…and a lot to own when you add insurance, maintenance, fuel, etc. And you may not use that exotic sports car every day.

Conversely, Charvet dress shirts cost a lot to buy, but virtually nothing to own. And they can be enjoyed as often as one likes.

How can this Old Money perspective on spending help you?

Try this: think of yourself as a Trust Fund Baby. You probably have regular infusions of cash coming into your bank account every week or every two weeks from a salary. You have some fixed and some variable expenses that send money out of your bank account every month (rent, food, Netflix).

Ask yourself this: are there any expenses that I can push to next month? Are there any expenses that I can reduce or eliminate? As we’ve discussed here before, your ATM card statement will reveal a lot.

For example: if you’re spending 4 bucks on a mediocre coffee every morning and it’s just a ‘grab and go’ experience, think about buying a coffeemaker and a thermos and brewing your own before you leave for work. That’ll be less expensive in the long run.

On the other hand, if you’re taking a moment a couple of times a week to sit in a cafe and really enjoy a fresh-brewed espresso (and the ambience) then that’s different. The value is different. So maybe you make that adjustment in order to refine your experience, and reduce your expenditure.

This refinement process is a lifelong endeavor, FYI.

Moving to a plant-based diet will also save you a tremendous amount of money on your grocery bill, as well as provide enormous health benefits. (More on this in an upcoming post.)

And, as always, considering your clothes as investments will help you avoid the ‘fast fashion’ trap of buying the latest trend. You can invest in a few quality pieces, and then mix and match effortlessly…and not purchase as often, again allowing those dollars to stack up.

The real trick, however, is to see money as a measure of independence. Yes, you can be financially independent–able to go for a period of time without earning–but you can also be independent of the consumer circus that is going on all around you.

This independence feels better than any material possession you could ever acquire.

Trust me on this, and let me know what you’ve decided to refine in your life.

• BGT