Upper class habits to stay rich

[publicsectorlife]

What habits do the upper class have to stay wealthy? What would they never buy that they would consider a waste of money?

Our household income is very good. But yet we seem to be haemorrhaging money with high mortgage, commuting and childcare costs.

But yet our friends with generational wealth (ie small mortgage) seem to be living such a different lifestyle with about 6 holidays a year.

We can’t do much about having no inherited wealth but I think we must be missing a trick.

People with inherited wealth on that sort of scale may well also have trust funds (that they may never talk about), and/or family who pay for one or more of those holidays. Family (or family friends’) property the can stay in on holiday. And school fees or other big expenses paid for by grandparents.

As other posters said, it’s not that they don’t enjoy the things you enjoy. They aren’t frugal in savvy ways. They just have access to more than you.

The way they stay rich is by investing in capital and by trading favours like lucrative jobs (or internships for their children, or introductions, or investment opportunities) with other rich people and cutting off the family who don’t manage to keep up. They do not tend to give the same legs up to friends who can’t return the favour in the same way except occasionally.

If you want to become wealthy, the most dependable way is to live well below your means, putting the excess into working capital in some way. But that sucks, so most people who become wealthy do so through a large degree of luck (though they may well have to work hard to be in a position to generate or take advantage of that luck).

Many "upper class" people are drowning in debt, or don't have 2 pennies to rub together.

They grow up with family money in the form of trust funds and know that they never need to properly stand on their own 2 feet. They don't learn good financial literacy and squander what liquid money they have access to, and the rest of their "wealth" is tied up in assets (antique furniture, art, silverware etc). The best they can do is marry someone from a similar background, so they can burn through their trust fund too!

Honestly, many of them are nothing to be admired.

I’m not suggesting that everyone should buy cheap tat but that’s a huge stretch from saying I am shocked at £300+ for an everyday dress. Are you honestly saying that there are no decent quality clothes for less than that? If so, it’s a bit of a bummer for those who have less than that left to live on once their mortgage/rent and bills are paid. And I still wouldn’t pay that much for a regular dress.

Savings and compound interest. I’ve never had much savings to speak of, for similar reasons to you. But I recently moved from a larger to a smaller house and kept some money back for building work I need to do. It’ll be a few months before the work can start so I’ve put it in a high interest savings account and will earn quite a lot in interest in just 6 months or so. If I had that kind of money available just for investment, it could increase hugely over a few years. And if you have, say £500k invested in stocks and shares, that can produce a nice income just from the interest. So if you had that and a well paid job, you could have a very comfortable life. I know people like this. Lucky them!

Upper class to me isn’t about money - a lot of the people I know who’d consider themselves this are actually skint. They have some big house that affords them the status, but then haven’t actually got any cash flow to do anything…!

If you’re talking about accumulating and keeping wealth… yes this will be hard to do if you have high outgoings eg childcare. You need to invest and create some passive income streams IMO. If you aren’t doing this, start now. Both of your ISAs is £40k a year tax-free investment a year.

I have not done this but am trying - I save and invest most of my money. Will I get there? Who knows.

That is probably what a good quality dress should cost, yes. We should own less. But we can’t because of cost of living etc. As you say, not that many people can afford that price tag. I mean the economy is broken for sure!

@No5ChalksRoad I think their level of commitment and consistency to it was almost religious though, they didn’t do these things most of the time because it’s sensible, they didn’t it for 15 years without fail. I think most people wouldn’t be able to, especially in a society that actively promotes consumption and keeping up with mentality

It's called compound interest, rich people stay rich because they have capital and that basically increases their wealth in their sleep without them lifting a finger (assuming it's invested properly). There's not much anyone without a vast inheritance or family money can do to keep up with that sort of head start, even with a decent wage. Xx

Depends how far back you're talking. They had ancestors who plundered and pillaged, schemed and backstabbed at a time when it was socially acceptable.

Having dodgy friends helps.

Having dodgy friends helps.

Class is different from wealth

Very few invest ethically

So part of the way they stay rich is by exploiting others (eg underpaying them for work), and having savings and investments in funds that don't give a damn shout ethics or the environment

They may rent properties to others and squeeze them for every penny.

And probably made huge profits from the Slave trade

The upper classes are better known for losing their money rather than keeping it. You could sell off your house in Belgravia but you can only do that once.

I find it fascinating they were always so sure their "tomorrow" was guaranteed.

Several of my friends died by their mid twenties. I always tried to strike a balance between living for today and saving for the future. I don't regret that one bit. None of us can be certain we will live a long life

Well, my family is descended from William the Conqueror and we live in a two bedroomed terrace. Go through all the rubbish on your purchase list and get rid of what is non essential. As for having six holidays a year, is that really all you aspire to? Believe me, you will then have loadsa money to spend.

Our inherited wealth friends:
inherit a home - they don't have mortgages
have trust funds to pay living expenses and school fees
very rarely go on holidays unless you count Scotland
don't buy new cars
their kids wear second half clothes and uniform

You're mixing class and money here.

But if you want to look at class, many upper class will be asset rich and those assets are working to generate wealth. In terms of life events accumulated assets means that you don't need to outlay money-theres a long standing joke that having matching furniture is a sign of being middle class because you go out and buy it all at once. When starting out in the world you have connections- look at the high numbers that go into lucrative estate agency because they can bring family connections.

If you want to look at a lower level of wealth, but where money can be saved. Not having to have financial products can save an awful lot. So buying a car outright rather than having something on finance is cheaper in the long run but removes a huge monthly outgoings. Things like boiler and homecare policies are inefficient, and if you have a decent level of savings and financial resilience you don't need to go down these routes. Most financial products that lower incomes use to help manage life are hugely cost inefficient.

You also classically never put the heating on.

The majority of "upper class" characteristics are not about enhancing life habits with more money - they're usually more about preserving what they have. People who inherit wealth or have more generally don't upgrade homes or cars unless it is truly financially beneficial. They often quickly eliminate higher interest debt, focusing on minimizing its financial impact.

They also begin to think about taxes and investing from an early stage - leveraging ISAs, Pensions, and even trusts, to grow and insulate wealth slower and ultimately quietly. Most ultra wealthy avoid high "status" purchases that depreciate over a short time (such as a new car, latest gadgets, or full-priced fashion). They tend to spend in assets that hold or increase value (improvements to property, education, or quality experiences that do not turn into ongoing costs).

If your income is solid but cash flows are tight, track how much money is quietly disappearing through recurring costs (such as subscriptions, extracurriculars for the kids, frequent take-out, etc.). Many affluent families live "below" their means, allowing savings to compound again.

Here is a good breakdown of how the wealthy maintain asset class and avoid lifestyle inflation Investopedia - 7 Simple Steps to Build Personal Wealth.

Should add, I am descended from aristocracy /landed gentry but they spend a decent chunk of their wealth establishing universities, schools, libraries and campaigning for law reform to better protect children and women. I feel so proud of them and they made the world immeasurably better

If I was extremely wealthy now I wouldn't be hoarding it all I would be finding ways to invest it and use it to help in the battle against climate change. That would feel to me like the best legacy I could leave my children and future generations.

It’s a choice. You can be super careful with money and limit social activity when younger to have a smaller mortgage/larger savings later or you can spend more on experiences when younger and expect to spend a larger portion of your income on covering a mortgage/rent when older. Either can be sensible depending on what feels like the best value to you. It’s a scale and for most people a sensible balance feels like somewhere in the middle where you do a mix of enjoying things you want to do now and saving for things you want to be able to do later.

As an example I inherited £20k when I was 19. Half of it I kept for a house deposit & the other half I spent on loads of travel in some of my university holidays. The £10k I spent has cost me in the region of £22k in interest on my mortgage so far but I still absolutely think spending it was a great decision. Actually I’m unconvinced the £32k now would even pay for the all trips I had back then (6 weeks in Australia, 4 weeks in Eastern Europe, week in Moscow, 2 weeks in New York, Boston & Washington, 2 weeks in Mexico, long weekends in Barcelona, Vienna, Monaco, Copenhagen & Oslo). Even if it could I wouldn’t enjoy that kind of travel in shared hostel rooms and with the crazy flight connections that work out cheapest now, where back then it was a real adventure. Someone else though might feel very differently about what value they’d place on those experiences so for them putting all the money into a deposit might well be the sensible decision. It’s very subjective

I should have added.. when they go on that holiday to Scotland they don't stay in a hotel, they stay with a friend for free. In the worst case they hire a house.

One thing the rich can afford to do is buy top quality everything, so it lasts for years and years. They can also afford to buy the exact - whatever it is - they want, so they don't fall into the trap of buying a much cheaper version in an effort to fulfil that need, but then it isn't right so another purchase is necessary and you end up spending more than if you'd bought the expensive one in the first place.

The upper classes have nothing to prove wealth-wise so don't succumb to 'keeping up with the Joneses' purchases and don't feel the need to have brand-new things all the time.

However, the 'upper class' (i.e. those who do not have to work for a living) have vast amounts in wealth, trust funds, land/property that provides income - wealth that even 'ordinary' people with high incomes and decent savings don't begin to come near - so really it's a nonsense to pretend that any 'habits' could take your wealth from working/middle/upper-middle class levels to upper class levels.

'Habits' to build wealth are really the same for everyone - minimise unnecessary spending, take the long term view with purchases to avoid false economy, and if you have funds to invest, invest them wisely - but for most of us, however sensibly we live, the best we can hope for is to be able to retire before we drop dead and live in reasonable comfort.

This is what I’ve observed from old money types -

Compound interest/investments

No/small mortgage and no credit cards

If you have a paying job you love, keep doing it as long as possible (rather than trying to do something very high earning/stressful and burning out at 50)

Frugality with things like cars - if it functions well, that’s fine. No need to be flashy. Ditto eating out - do it rarely, and certainly no regular takeaways/deliveroo.

Also holidays - drive to France, rent a house (or ideally borrow one 😂). Don’t spend £££ on ‘luxe’ package holidays and never do stuff like Eurodisney which is also extortionate.