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.

! not ?

At the time I used to drive a van so it was easy to open the double doors and lift it in the back, heavy but quick and convenient.

I agree with this. All the discussion around forgoing Starbucks is just noise in the context of true wealth. The reality of generational wealth is that investments drive it, as well as the social advantages it can buy, leading to income earning opportunities. But really it’s accumulated capital generating returns, and as you have seen it’s hard to spare enough money each month for that in a meaningful way when you’re living an expensive lifestyle.

@BuddhaAtSea - agree, however - I do know quite a few people who were born into money but didn’t quite realise what they need to do to maintain a certain level of wealth. So while they had a childhood with private schools, lots of holidays and second homes, they now have a smaller (albeit mortgage free) homes and send the kids to state schools. Of course there’s a lot being passed down, but it doesn’t always follow that money just keeps on growing down the generations!

Don’t buy anything you don’t actually need.
Don’t change anything that doesn’t need changing.
Fix things rather than replacing them.
Rearrange the furniture to cover the stain on the carpet.

There was a programme years ago called Monarch of the Glen. The aristocratic wife said she hadn’t bought any clothes for decades. She had a huge wardrobe which didn’t wear out and no longer wore underwear.

I don’t think having no mortgage is necessarily the key. It may be more financially savvy to have a mortgage and invest the capital you would have paid into the house, at a higher rate of return than the mortgage.

Right, but you won’t accumulate anything if you buy your coffee in Starbucks.

A lot of people have the opportunity to accumulate money to make life easier for their children or indeed themselves in their old age.
But it requires spending less than you earn. Scrape together the money to buy car/sofa up front rather than on finance. Do without furniture until you can afford to buy some.

Accumulation is very long term. If you live frugally this week, the money you save doesn’t seem worth it. You wish you’d had the coffee. Over the course of a year, it’s enough to earn interest. Over the course of a lifetime, it’s enough to get your DC off on the right foot.

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

This is a big part of it.
Personal connections are worth money!

They don’t repay their mortgages. They have them on interest only are investing their capital.

How on earth do you know so much about your bosses every move 24/7, are you their housekeeper/cook/butler?

If you work in public sector I refuse to believe you have a “very good” income. Public sector is low paid. It’s basically a given that neither of you individually earn £120k, which is generally the level considered to be a high earner.

So if your question is how come you have an average life compared to someone with generational wealth, the answer is your income is not comparable to their wealth surely?

This rhetoric is disingenuous. Yes, some people are wealthy and frugal, however many are able to buy nice things and remain wealthy. They don’t live completely joyless lives on a whole.

No debt, passive income galore, holidays staying with friends in their houses and second homes. These are freely shared around.

Hmm. Seems a bit unlikely to me. How on earth do you know all that?

We holiday a lot (at least pre-kids, now it's more of a logistics thing than money).

When we holidayed with in laws, they were simply astonished that we didn't want checked baggage, didn't pay for in flight meals, booked separate transfers, didn't always book a pool (in laws don't swim!) and in fact just spin the needle on Skyscanner and see what flights are cheap rather than make out starting point "Santorini in august, must be this village our rich friends recommended".

People see that you went on holiday, they don't see the million little choices you made along the way that made it affordable.

(A friend showed us a complaint letter they sent about their week long holiday - £1500! Our target at the time was £250/week each on average.)

The know two multi millionaires, one is inherited and then very well invested so they have a massive passive income. They’ve never worked, but aren’t flash, they have a nice house but not a massive mansion, a nice car but nothing you wouldn’t want park in a supermarket carpark. Their outlook is all about gaining assets and avoiding liabilities.

the other started a business well ahead of a curve of a certain industry and it did really well, they were very brave, took a risk, really struggled for a few years, it paid off, they on the flip side still work insanely hard despite being well into retirement age. I don’t think many people would have the appetite for work that they do. I certainly wouldn’t be abandoning holidays a couple of days in because of a business need but it’s very routine for them

they‘re willing to fork out for expensive experiences where they will mingle with other rich people. This gives them a network to ultimately profit from

They invest in equities/shares and don’t leave money in savings accounts with minimal interest. They buy second hand cars outright. The own property not rent it. They live within their means, often quite frugally. They often stay within friends on holiday who have second homes.

The cost of maintaining this kind of lifestyle has increased dramatically, even over the past twenty years.

Schooling a great example - three kids at day school is getting on for £100k a year now in parts of the country. Three times the cost it was twenty years ago.

To have the confidence / cash flow to fund that for 15+ years is a significantly bigger undertaking than in the past…!

One big way is that they can spend less in the long run on the same stuff.

To quote the inspiration for my username:

The reason that the rich were so rich, Vimes reasoned, was because they managed to spend less money. Take boots, for example. ... A really good pair of leather boots cost fifty dollars. But an affordable pair of boots, which were sort of OK for a season or two and then leaked like hell when the cardboard gave out, cost about ten dollars. ... But the thing was that good boots lasted for years and years. A man who could afford fifty dollars had a pair of boots that'd still be keeping his feet dry in ten years' time, while a poor man who could only afford cheap boots would have spent a hundred dollars on boots in the same time and would still have wet feet.
This was the Captain Samuel Vimes 'Boots' theory of socio-economic unfairness

Upper class don’t have to worry about money at all.

Do you mean wealthy? Completely different thing.

It is a bit ridiculous to just refuse to believe that.

There are plenty of highly paid public sector role, headteachers, hospital consultants, senior civil servants - of course these aren't the majority but it's not like everyone in the private sector makes 120k either

Adult kids from wealthier families can be given a deposit for a property or even be bought a property outright.
Wedding paid for by their family
No student debt because their Dad paid their tuition fees
Family holidays - ski trip and villa holiday - can be paid for by the parents.
They may still be given a monthly allowance even though they’re earning
Parents might buy them a car (‘I want my grandchildren in something safe’)
^ so the people from wealthier families can be massively subsidised.

I doubt you’re missing a trick but if you want to create wealth you need to be investing a percentage of your income every month into stocks and shares ISAs using a low-cost platform (I use Vanguard).
Which means you need to budget carefully to be able to do this. I use my own spreadsheets but you can get apps eg YNAB

A couple of points:
Wealthy people know that cars depreciate horribly and are happy to drive older, in flashy cars and keep them for longer. It’s a workhorse, not something to impress people with. Buy a five year old German car from a main dealer and keep it forever.
Save and plan for things - no debt other than your mortgage and student loan
Don’t have expensive holidays
Buy second hand furniture
But your phone outright and have a cheap (I use Lebara) sim-only contract. Keep the phone as long as you can.

Sometimes the difference is in whether you are in the class of people that feels they needs to show off their wealth or not. Those who do, even when genuinely wealthy, spend a lot of money on the right possessions and have less left over for the things they'd actually enjoy. I think this is an issue that often affects the upwardly mobile at all levels of society, whereas those who are comfortable in their social status feel less of a need to demonstrate it materially.

So: the socially insecure newly upper middle class person is spending cash on a big shiny car, fashionable clothes, a perfect front garden etc. The person with the same income who grew up UMC is perfectly happy with a 30-year-old Land Rover, a battered raincoat and wellies, remembering about the weeds once every two months and so on. This adds up to some considerable savings!

Your friends have inherited more money than you think they have.