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9 Old Money Habits That Quietly Replace the Need to Show Off — Transcript

by Nick Invests · 3,374 words · 535 segments · language en · Watch on YouTube

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0:00Two driveways, 100 ft apart outside
0:03Nashville. Driveway one, a white Range
0:06Rover, temporary tag still in the
0:08window, leased $1,140
0:11a month. Behind it, a house bought 22
0:15months ago for $790,000.
0:17That's Cal, 41, medical device sales.
0:22His mail, an unopened card statement,
0:24and an HOA letter about his fence.
0:27Driveway two, a silver 2011
0:31Camry with a dent. That's Helen, 58. Her
0:34mail is a water bill and every January
0:37since 1997, one envelope with the same
0:40return address. She reads it, she puts
0:43it in a drawer, nobody has seen inside
0:45the drawer. Helen has never earned more
0:48than $91,000
0:50in a year. Cal makes 185.
0:53Cal is worth about 80,000. Helen is
0:56worth about 2.3 million. This isn't a
0:59story about rich people being cheap.
1:02It's about why the richest people you'll
1:04ever meet spend where you can't see it,
1:06and why the car lot, the card company,
1:09and the HOA need you never to find out.
1:12My name is Nick, and I've spent an
1:14unhealthy number of weekends reading
1:16surveys of millionaires to find out what
1:18they actually drive, which turns out to
1:21be a Toyota. If you've ever felt poor
1:23pulling into a parking lot, hit
1:25subscribe. Quick honesty note, Cal and
1:28Helen are composites. I made them up,
1:31the numbers around them are real, and
1:33I'm not a financial advisor, so this is
1:35arithmetic, not advice for your specific
1:38life. One thing before the cul-de-sac.
1:41If you still don't know what to do
1:43first, we put together a short book
1:44called The Money Ladder. 41 pages, six
1:48levels, one job per level with
1:50worksheets, so you can find the level
1:52you're actually on. It's at
1:54nickinvestsbook.com,
1:56links in the description. Okay, here's
1:58the thing nobody says out loud. Old
2:01money habits sounds like a lifestyle
2:03brand. Linen, a Labrador, a boat with a
2:07woman's name on it. But, there's actual
2:10research on how established wealth
2:12spends and it points the opposite
2:14direction.
2:15In 1899,
2:17an economist named Thorstein Veblen
2:19watched the robber barons build marble
2:22palaces on 5th Avenue and gave it a
2:24name, conspicuous consumption. Buying
2:28things so people can see you buying
2:30things. The families who'd already been
2:32rich for a century found it
2:34embarrassing. If a stranger could tell
2:36you were rich, you'd done it wrong. Now,
2:39fast forward. A researcher named
2:41Elizabeth Currid-Halkett went through
2:43the government spending data and found
2:46that since 2007,
2:48the top 1% spend a noticeably smaller
2:51share on visible stuff. Middle-income
2:54households didn't. The rich didn't stop
2:56spending, they moved it. We'll get to
2:58where. So, the show-off money slid down
3:01the income ladder to people like Cal.
3:04Thomas Stanley, who spent his career
3:06surveying millionaires, found that 86%
3:09of people driving prestige brands
3:11weren't millionaires at all.
3:13The actual millionaires paid a median of
3:16$31,000
3:18for their car back in 2009 and the most
3:21common badge in their driveways was
3:23Toyota. And then, the industry did
3:26something I almost admire. A few years
3:29ago, quiet luxury became a trend.
3:31Stealth wealth, old money aesthetic.
3:34Within a year, the quiet look came with
3:36a logo-free cashmere sweater for $2,800,
3:40so people in the know could tell you'd
3:42paid $2,800 to not have a logo. Showing
3:46off got so profitable, it learned to
3:48whisper.
3:49Nine actual habits. The first one is
3:52parked in Helen's driveway.
3:54One, the car nobody photographs. The
3:57average new car in America sold for
3:59$50,562
4:02in September.
4:03The average payment on a financed one
4:05just hit a record $787
4:09a month. One in four new car loans now
4:12runs 84 months,
4:147 years. There are marriages that don't
4:17make it to the last payment. And a
4:19record 21% of buyers pay over a thousand
4:23a month. That's Cal. His Range Rover
4:26costs more per month than Helen's
4:27mortgage ever did.
4:29The lease ends in 14 months and the
4:32buyout is $41,000.
4:34Remember that date.
4:36Helen's Camry is 15 years old and the
4:39dent pre-dates TikTok. She bought it
4:42used in 2014 for $11,500.
4:47Cash, the average car on American roads
4:50is now 12.8 years old, a record. Helen
4:53isn't weird, she's a little ahead of the
4:55national average and a long way behind
4:58the Instagram one. Now the math. Cal
5:01pays 1140. A sensible used car runs 250.
5:06That's an $890
5:08gap. Invest it at 7%, the return I'll
5:11assume all video, and after 30 years
5:14it's about 1.08 million dollars.
5:18Before inflation, so call it 450,000
5:22in today's money. For a car that he
5:26doesn't own. And here's how it happened.
5:28Because Cal didn't walk in asking for a
5:31thousand dollar payment. He sat down in
5:33the finance office, looked at the sheet,
5:36and said that's too high. The finance
5:38manager said, "Let me see what I can
5:41do." Typed for a while and turned the
5:43screen around. Same car, same price,
5:46lower payment. Cal felt like he'd won
5:49something. What changed was one number
5:51nobody read out loud.
5:5460 months had become 84. Nobody sells
5:57you the car, they sell you the month.
6:00Old money figured this out before there
6:02were finance offices. The point of the
6:04car was to get to the thing. It was
6:07never the thing.
6:08Two, they don't let the neighbors set
6:11the budget. The HOA letter about Cal's
6:13fence
6:14The quote came in at $9,400.
6:19And it's not really about the fence.
6:21Three economists working with the
6:23Philadelphia Fed found a natural
6:25experiment up in Canada. Lottery winners
6:28and their neighbors on very small
6:30streets. For every extra $1,000 somebody
6:34won, bankruptcies among their close
6:36neighbors went up 2.4%.
6:39Not the winners, the neighbors. And when
6:42they looked at what the bankrupt
6:43neighbors owned, it was visible stuff.
6:46Bigger houses, cars, motorcycles, not
6:49cash. Not pensions. They went broke
6:52buying things the winner could see.
6:54Showing off is contagious and it spreads
6:57house to house. You don't need a
6:59cul-de-sac to catch it. Picture the
7:0129-year-old version of Cal. He rents.
7:04Two coworkers just moved into the new
7:06building downtown with the rooftop, so
7:08he did too.
7:10His rent went up $340
7:13a month.
7:14$340 a month is almost to the dollar
7:18what he'd been about to start putting
7:20into a Roth IRA.
7:22He didn't decide against the Roth. He
7:24never decided anything.
7:26The building decided. Cal's fence is
7:28going up because the guy across the
7:30street put in a pool.
7:32Cal's not stupid. Nobody in this video
7:35is stupid.
7:37He's responding to a signal exactly the
7:39way it was designed to be responded to.
7:42Helen's defense is almost rude in its
7:44simplicity. She decided around 1997 what
7:48her life costs, and she hasn't re-asked
7:50the neighbors since, which raises a
7:52question. If she's not buying what
7:54everyone can see, what did she do with
7:5629 years of paychecks? Hold that, it's
8:00in the drawer.
8:01Three, buy it once. Helen owns one good
8:04coat, black wool bought in 2008 for
8:07about $400, and she's worn it by my
8:10rough count 500 times.
8:1280 cents a wear. Cal's closet is full of
8:15$60 jackets. A $60 jacket worn 20 times
8:20costs $3 a wear. To get Helen's 500
8:24wears out of $60 jackets,
8:26you need 25 of them. $1,500.
8:31The cheap version costs almost four
8:33times the expensive one, and it never
8:35once makes you feel like you own a coat.
8:38Phones, same shape. Cal upgrades every
8:42year. Helen upgrades when the battery
8:44dies. 40 years of that gap invested is
8:47roughly $67,000.
8:51And nobody has ever been impressed by a
8:53phone for longer than it takes to put it
8:55back in a pocket. Careful, because
8:57buying quality once is a rich person
8:59privilege. If you have $10, you buy the
9:02$10 boots that leak. The habit isn't buy
9:05expensive things, it's buy fewer things
9:08and stop buying them again.
9:10Four, they stay in the house. Warren
9:13Buffett bought his house in Omaha in
9:151958
9:16for $31,500.
9:20One of the richest men alive has had the
9:23same front door for 68 years, and he's
9:26called it one of his best investments.
9:29Helen bought hers in 1999.
9:32Three bedrooms.
9:34She could have traded up in 2005 when
9:37everybody did and in 2021 when everybody
9:40really did, she didn't. Here's why
9:43that's a habit and not a quirk. Every
9:45move costs money that doesn't show up as
9:48a purchase. Commissions, closing costs,
9:51the movers, the new blinds, the while
9:53we're at it kitchen. The rule of thumb
9:56is roughly 8 to 10% of the home's price
9:59every time you turn the key. On Cal's
10:02house, that's $63 to $79,000
10:06just to leave, paid to people who aren't
10:08him. Cal's mortgage is 4,600 a month.
10:12Helen paid hers off in 2019.
10:15And here's what that looks like on a
10:16Tuesday. Cal checks his banking app
10:19before he buys groceries. Helen doesn't
10:22know what her banking app looks like.
10:24She's not richer in the sense of earning
10:26more. She's richer in the sense that the
10:29month doesn't have teeth. So, where did
10:32the rich move their spending? Here five,
10:35they spend where you can't see it. Back
10:37to current Halkias' numbers.
10:39Education is almost 6% of a top 1%
10:43household spending. For a middle-income
10:45household, it's just over 1%.
10:49And the top 1% education spending has
10:52gone up three and a half times since
10:541996
10:56while the middle stayed flat. Between
10:582003 and 2013, college tuition rose 80%.
11:03Women's clothing rose six. The rich
11:06stopped competing on what got cheap and
11:08started competing on what got expensive.
11:11You can't see a tutor from the street.
11:14Same with retirement. Vanguard looked at
11:16about 5,401
11:19accounts this year. The average balance
11:21is about $168,000.
11:24The median, the actual middle person, is
11:2744,000.
11:29The average is nearly quadruple the
11:31median because a few accounts are
11:32enormous and those belong to people
11:34who've done one invisible thing for a
11:37very long time.
11:39The Fed's numbers make it starker. Among
11:42families in their prime working years,
11:44the bottom half of earners with a
11:45retirement account average about $55,000
11:49in it.
11:50The top 10% average 913,000.
11:5416 to 1.
11:55And nobody has ever pulled up to a high
11:57school reunion in a 401. It is by
12:00definition the thing you don't show.
12:03Helen's first year, the transfer was
12:06$110 a month and it hurt. By the end, it
12:09was 22% of her paycheck. Her coworkers
12:13thought she was broke. She was in the
12:15sense that the money was gone from
12:17checking. It had just gone somewhere
12:19that pays interest. Six, they buy time,
12:23not things. Here's a habit that looks
12:24like spending and isn't.
12:27Two trips to Portland a year to see her
12:29sister. A kid down the street who mows,
12:33a cleaner twice a month since her knee
12:35started complaining.
12:37That's the whole list of things Helen
12:39spends on that she could cut. She won't
12:42because a study of 6,000 people across
12:44four countries found that the ones who
12:46paid to buy back time report higher life
12:49satisfaction.
12:51And because her sister is 70.
12:54Cal has a boat. It's in storage. He's
12:57been on it twice. The storage costs $210
13:01a month, which over a year is the cost
13:03of two trips to Portland, except the
13:06boat doesn't ask how he's doing.
13:08One honest caveat, experiences beat
13:11objects on average if your basics are
13:13covered. A 2018 study found that lower
13:17down the income ladder, that advantage
13:19disappears.
13:21A thing you use every day can beat a
13:23weekend. So, the habit isn't spend on
13:26experiences, it's stop paying rent on
13:28things that don't love you back. Six
13:31down and none of them explain the
13:33envelope. The next one starts two.
13:36Seven. They don't talk about it. Nobody
13:39on the cul-de-sac knows Helen has money.
13:42Not her neighbors, not her co-workers.
13:45Her brother thinks she's comfortable.
13:47Her brother has on three separate
13:49occasions offered to lend her money.
13:52This is one of the oldest codes there
13:54is. A survey of people with at least $3
13:57million to invest found that 64%
14:00had told their kids little or nothing
14:02about the family's wealth. Some because
14:05they were raised not to, some because
14:07they were afraid the kids would stop
14:08trying, and silence has a function.
14:11Remember the lottery study? Helen's
14:14quiet isn't modesty, it's insulation for
14:17everyone within 100 ft. But here's the
14:20trap and it eats fortunes. Silence in
14:24public is a habit. Silence at home is a
14:27mistake. When families lose wealth
14:29across generations, the reason they give
14:32isn't bad investments. It's that nobody
14:34ever talked. The kids inherited money
14:37and no instructions.
14:40So the real version of this habit is
14:42quiet on the street, explicit at the
14:44kitchen table.
14:45Which is why this January Helen did
14:48something with the envelope she'd never
14:50done in 29 years. Eight. They leave the
14:53statement in the drawer. The envelope is
14:56a fund statement. Helen opened the
14:58account in 1997,
15:01picked a broad index fund, set up an
15:03automatic transfer, and then did the
15:05hardest thing in investing. Nothing. She
15:08has never sold a share. Here's what that
15:10looked like in 2020.
15:12March, the market down a third in 5
15:15weeks, every headline on fire. Helen's
15:18statement for that year arrived in
15:20January of 2021.
15:23And by then, the crash was gone from the
15:25page. It came and went inside a single
15:28envelope. Cal, who was 35, watched it on
15:32his phone in a parking lot and sold at
15:34the bottom. He did it again in April of
15:372025
15:39because the news was loud. It's up a lot
15:41since. 983% of actively managed large
15:45company funds lost to the plain index
15:48over the last 20 years.
15:50And that's the professionals. Regular
15:52investors do worse.
15:54Dalbar found the average fund investor
15:56trailed the market by 8 and 1/2 points
15:59in 2024,
16:01buying after the good news and selling
16:03after the bad.
16:05In fairness, that gap shrank to under
16:07one point last year, and a paper this
16:10year argued bad timing really costs
16:13maybe a tenth of a percent annually.
16:16So, carefully trading costs something.
16:18Nobody's how much, and Helen's number is
16:21zero. Then there's the fee. 1% sounds
16:24like nothing. A hundred thousand dollars
16:27for 30 years at 7% is about 761,000.
16:33At six, after a 1% fee, it's 574.
16:38The fee costs you a hundred eighty-seven
16:41thousand dollars. Nearly a quarter of
16:43the ending balance for a line you'd need
16:45a magnifying glass to find. There's a
16:48real Helen. Grace Groner, a secretary at
16:51Abbott Laboratories, bought three shares
16:53in 1935 for a hundred eighty dollars and
16:57never sold. When she died in 2010 at a
17:01hundred, they were worth about 7.2
17:04million. One decision, 75 years old.
17:08Now, this January,
17:10Helen opened the envelope, and for the
17:12first time, she didn't put it in the
17:14drawer. She put it on the kitchen table
17:16in front of her two kids with an index
17:19card clipped to the front. Three lines
17:21in her handwriting, buy the whole
17:23market, automate it, don't look.
17:26That's the inheritance that matters. The
17:28money is just what the card produced.
17:31And underneath the statements, there's
17:33one more thing.
17:34Nine, they plan for people who aren't
17:37born yet, a will. Helen signed it in
17:402011, updated it twice, and her kids
17:43have a copy.
17:44That puts her in a minority.
17:47Depending on which survey you trust,
17:49somewhere between a quarter and under
17:51half of American adults have one. The
17:54most common excuse, haven't gotten
17:56around to it.
17:58Which is a bold thing to say about the
17:59one deadline nobody in history has ever
18:02missed.
18:03We're about to hand down around $124
18:06trillion over the next two decades, by
18:09one estimate, and most of it will pass
18:12through families who never wrote
18:13anything down.
18:15You've probably heard that 70% of
18:17families lose their wealth by the second
18:19generation and 90% by the third.
18:22I'm not going to use it. It comes from a
18:25consulting firm, it's never been
18:26published, and the one academic who went
18:29looking traced the whole genre to one
18:32flawed study from the '80s. What I will
18:35say is this, the families who keep it
18:38have the boring paperwork done, and the
18:40families who lose it have a story that
18:43starts with, we never really discussed
18:45it. And the last page of Helen's will is
18:48a gift to the library where she learned
18:50to read. Nobody will ever see her name
18:53on it. Americans gave about $617
18:56billion to charity last year, a record.
19:00But the share of income individuals give
19:02has been falling for 25 years.
19:05We're giving less of ourselves and
19:07spending more on what the neighbors can
19:09grade.
19:10The old rule ran the other way. Frugal
19:13in public, generous in private. The
19:16money that buys the most doesn't come
19:18with a plaque. Here's where I get a
19:20little cynical because somebody is
19:23making money off every one of Cal's
19:25habits and it isn't Cal. Start with the
19:29car. Buyers who roll an old loan into a
19:32new one are now financing $57,000
19:36on average, paying 952 a month and on
19:40track for 16,600
19:43in interest. Part of that payment is for
19:45a car they already gave back. Americans
19:48owe $1.26 trillion on credit cards.
19:52About 60% of card holders carry a
19:55balance and issuers raised limits by $85
19:58billion in a single quarter this summer.
20:02The limit went up, your income didn't
20:05and 37% of adults couldn't cover a $400
20:09surprise with cash. A lot of those
20:11people are driving something very nice
20:14to a job they can't afford to lose. None
20:16of that is an accident. The long loan,
20:19the credit limit, the sweater with no
20:21logo. The industry doesn't care whether
20:24you're loud or quiet. It cares that you
20:26keep buying the costume. And one honest
20:29point against my own title.
20:31Kurt Halkett's conclusion wasn't that
20:34quiet spending is virtuous, it's that it
20:37works. A tutor, a good doctor, a funded
20:40retirement, a will.
20:43Those pass privilege down far more
20:45reliably than a handbag ever did.
20:48So, old money habits aren't a vibe.
20:52They're a system that's been quietly
20:53winning for a century and the only
20:56question is whether you're allowed to
20:57use it, too. You are, you just can't see
21:00anyone else doing it. Quick aside, if
21:03you'd rather be on the other side of
21:05videos like this, making them, there's a
21:07link to our ebook below.
21:09No pressure. Back to the street.
21:12Let's be fair to Cal because the title
21:14makes him sound like a cautionary tale
21:16and he's not. He's 41 doing the normal
21:19thing. Every purchase in his driveway
21:22was sold to him by someone paid to sell
21:25it
21:26on terms written by someone paid to
21:28write them. The system isn't failing
21:30Cal, it's working on him exactly as
21:33built. But here's the version of him
21:35that gets to be Helen and it starts with
21:37that date. 14 months from now, the lease
21:40is up. He skips the $41,000 buyout,
21:43hands back the keys, buys a 4-year-old
21:45Camry for 16,000 in cash and the 890 a
21:49month goes into the account before it
21:51reaches checking.
21:53The fence.
21:54He calls the HOA and asks for the
21:56cheapest thing that satisfies the
21:58letter. It's a hedge, $1,100 and the
22:02rest of the 9,400
22:04goes into the same account.
22:07He sells the boat. He signs a will. He
22:10keeps the house because moving is the
22:13expensive habit.
22:15And when the guy across the street
22:16starts digging, he does the one old
22:19money thing that costs nothing.
22:22He says, "Nice pool." and goes inside.
22:25Nine habits and here's what they add up
22:27to.
22:28Not a brand, a time horizon.
22:32Old money isn't a number in a bank, it's
22:34money that stopped needing an audience a
22:36long time ago and got to keep
22:38compounding while everybody else was
22:40busy being watched.
22:42Helen's net worth isn't the twist. The
22:44twist is that nobody on her street would
22:47ever guess and that was the point.
22:49So tell me in the comments, what's the
22:51most expensive thing you own that exists
22:54mostly so other people can see it.
22:57I'll go first, it's this microphone. I
22:59read them. I'll see you in the next one.

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