The Three (3) Golden Rules of Old Money

The three golden rules of old money according to Mike Lapham:

1. Don’t tell anyone, because they’ll treat you differently.
2. Don’t show that you have wealth.
3. Certainly don’t spend it.

What is “Old Money”?

Simply put the term “Old Money” means inherited money. To be more precise it means the part of the financial assets a person now owns that was given to them by their ancestors. This does not include any financial assets the person acquired on his own without using any of their inherited financial assets.

Who is Mike Lapham?

Although I cannot find an exhaustive reference regarding Mike Lapham as the author of the 3 golden rules of old money there exists a Mike Lapham who do belong to old money in America and in fact there are several persons online who have the family name Lapham who do belong to old money in America.

Rule 1: Don’t tell anyone, because they’ll treat you differently.

This is definitely true. People with wealth and status are treated differently from people of more modest financial standings. However this goes both ways in extremes. If you have wealth or status people either treat you more favourably or treat you worse. Generally people will try to get into your good side knowing your wealth and status could improve their financial and social standing as well.

Let us take a simple scenario of a truly or even moderately rich persons who decides to eat at a normal restaurant. If these people start telling stories or even bragging about how much money they made in certain financial transactions and the wait staff and the other customers overhears these people would surely be treated differently by all the people in the restaurant.

These people could be telling these “I am rich” stories to try to bait other people into knowing them and to perhaps do business with them. They could also be trying to get better treatment from the wait staff of the restaurant who they think would be smitten with their “I am rich” stories. They could also be trying to attract any of the opposite sex in the restaurant.

All of what they are trying to achieve could happen it depends upon the reaction of the other people around them but what happens if they are no longer rich? Let us say for example a much even richer customer decides to eat at the restaurant? I saw this happen first hand in a restaurant I was eating.

I was eating at a restaurant when two (2) men stepped in and sat at a table near me. Immediately they started talking about how they made good money in a financial transaction they made and talked non-stop about how they were doing well with their business as they ate. At a glance I already see some other customers looking at them from time to time though I cannot read their reaction to them.

The wait staff in the restaurant were fawning at them and were ever so attentive to them. Then another customer a man near their table also began talking to his female companion. They talked about their recently concluded trip around the world and how they were expanding their other company which was overseas. Things in the restaurant immediately changed.

The restaurant wait staff and some of the customers began taking notice of them. I was patiently observing what was happening to the restaurant and waiting for someone to bring down the two (2) braggarts and this old couple just did it. The braggarts by now looked nervous and stopped talking.

This is just one story but one that can be magnified into the wholeness of life. How many times have you felt the urge to brag about your wealth in order to attract someone’s attention not knowing that the people you attract would primarily be interested in your fortune only and not you as a person? What happens if they start asking for a share of your fortune? Will they leave you or even be angry with you if you do not give them a share of your fortune?

Rule 2: Don’t show that you have wealth.

Showing signs of your wealth like wearing branded and expensive clothes as well as wearing expensive jewellery (jewelry) could also mean trouble for you. An expensive house or car and any other expensive possessions could put you in danger. People normally feel jealousy when they see other people having possessions which they do not themselves possess.

You must remember that many people are illogical. Many people do not even consider the hard work that other people have done to acquire their possessions like working very hard and even risking one’s health and future just to attain a certain degree of financial abundance that enables them to afford their possessions.

For many people blinded by jealousy the only thing that matters is that they do not have what the other person who they are envious of have. This is dangerous. These people blinded by jealousy might wish ill will and even harm to the person they are envious of. They may even go to the extreme of actually harming the person they are envious of.

Another point to consider is that displays of wealth attract a lot of criminal attention. This is the reason why many rich people do not go into areas that they consider unsafe for them but might actually be harmless to common people. This not only applies to rich people but to common people as well.

In Africa for example carjacking is rampant and criminals do not even need to steal your car while you are away. You could just be stopping in the street waiting for the red light to turn green and this would be enough for criminals to point their guns at you and steal your car. It is reported that criminals in Africa like to steal new cars according to a specific brand.

If you were an African you would definitely be more safe commuting or driving an old car. This is not to find fault with people buying brand new cars this is just meant to show that displays of wealth even wealth considered average could be dangerous for anyone. This does not only include cars but jewellery, handbags, eyeglasses, sneakers and any items which could be considered expensive.

Rule 3: Certainly don’t spend it.

This means using your money wisely by not spending it on frivolous and unnecessary things but rather by investing it in more moneymaking ventures. There is a famous analysis of how money gets lost along each succeeding generations of a family. The first generation builds up the business while the second generation makes the business prosper.

Guess what the third generation does? You guessed it they squandered the fortunes of the business their ancestors built. This cycle repeats itself throughout the generations. While this may not be true for all families it reflects a common behaviour between generations about their family’s fortunes.

There are many generational rich families around the world who have managed to escape this generational rich to poor transition by good wealth management. For example many appoint trustees from both inside and outside the family to handle their wealth such that the inheritors of their wealth would be prevented from spending all of their fortunes.

At most these inheritors are given a very generous allowance which allows them to live luxuriously without spending all of their fortunes. This leaves the family’s wealth intact and even more prosperous as time passes no matter what happens. This example could be followed even by middle class families and even if their children still have to work for a living at least they have regular passive income courtesy of their ancestors.

Do Old Money People Feel Guilt For Being Rich?

This is very hard to know and would vary from person to person. I have actually met a person who feels guilty about being rich and wants to increase the salaries of their family company’s employees. Her parents who have built the family business however have an opposite opinion. They would rather pay as little as they can to their employees.

You can already see the difference in the way each generation thinks about money. The younger generation having grown up with money is more at ease with spending it especially if they know that they can afford it easily. The older generation meanwhile who started the business are the exact opposite.

They started out with little to no money and risked what little money they have. This made them stingy in spending money even if it may be for a good cause. Their main concern is towards earning more money even though they are financially secure and successful already in life. I am sure many people especially those coming from the rich and even middle class experiencing this dilemma.

Do they lack the confidence that they cannot recreate the wealth they inherited from their ancestors?

Many people who have old money suffer from the perception from other people that they do not deserve their wealth because they did not earn it. There have been many old money people who tried to break this negative perception of them by starting out on their own or using their old money to create even more successful businesses and also increasing their family’s fortune in the process. This however is not common.

In fact 9 out of 10 self-made millionaires were not born rich. This is according to the study by the financial organisation Fidelity Investments. This means that most of the generational rich or those who inherited their fortunes do not have the desire to venture out and would rather keep their status quo.

Old Money vs. New Money

No article would be complete without comparing Old Money with New Money. New money is described as the financial assets gained by the first generation of a family. People with new money are often characterised as ostentatious with the display of their wealth and are more aggressive in business and with other form of endeavours.

While most of the old money people predominantly shun the limelight most new money people embrace the limelight. There is a method to this madness especially in the digital world. Many old money people are secure in their fortunes and do not seek to further increase their fortunes. They would rather enjoy their luxurious life in private.

Many people who have new money in the meantime are still in the stages of solidifying their fortunes and are actively finding new sources of riches. One way of doing this is by attracting people with displays of wealth. This is a tried and true formula as it is true that many people are attracted to successful and rich people who may have the capability of making them rich as well.

Conclusion:

Though the three (3) golden rules of old money mainly applies to people who inherited fortunes it also applies to everyone. For example the first two rules were made up to protect people from other people who may want to take and even steal one’s fortunes. The third rule is applicable for anyone who wishes their descendants to be more financially secure by living them financial assets which may last in perpetuity if well managed.

In its simplicity the three (3) golden rules can be summarised into two main words: Simplicity and Thrift. Many other financial advise have been derived from these two (2) words all with similar advise about money. Anyone can benefit from these two (2) words whether rich or poor whether young or old.

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