The Bank of Mum and Dad: US/UK Comparison
What is different, what is the same across the Atlantic?
Hello to new and loyal readers,
I spent the week in North America last week, where I was interviewed on the Trevor Noah podcast, did two book events and several exciting meetings, on which more soon…. I also attended two female-only conferences, which left me convinced that America, for whatever reason, does female professional solidarity best.
As Thomas Piketty’s magnum opus Capital set out, the inheritance economy is not a uniquely UK or European trend, but a global phenomenon. This week, we are delving into the key differences and similarities between parental wealth in the US and the UK. Some of this is surprising, some of it perhaps not.
In the UK, BOMAD is about housing; in the US, it is about college
If you are familiar with my work, you will know that the BOMAD is all about house prices in the UK. The cost of a home has outpaced wages to an almost absurd degree. The average first-time buyer age has crept from 29 to nearly 33 (36 in London), with more than half of purchases funded by parental help. Housing affordability is the crisis that defines inheritance and parental privilege in the UK.
But the story is different in the US, where it has, since the 2008 financial crisis, focused on the cost of college. Tuition in private colleges has surged 181% over two decades; families now cover nearly half of costs directly, up from 38% a decade ago. African American students carry the heaviest debt, and repayment has become a defining economic burden for Millennials and Gen Z, now a political issue. The biggest challenge, however, is for those who have the debt, but for whatever reason, did not graduate - some 40% of all enrolled. One of the more bonkers data points I read about college debt in America was how many older people held this debt: 6.6% of Boomers and 14% of Gen X in 2021. Given the current long-term loan trend in the UK, this scenario will no doubt soon be playing out in the UK too.
Harvard is just one of a number of colleges that have announced that they will be tuition-free for undergraduates and for families with incomes of up to $200,000, which tells you a lot about the perceived threshold of affordability of the top colleges in the US.
On the other hand, though, homeownership is slightly more attainable in the US (although becoming less so). There is some evidence that Gen Z are outpacing Millennials and Gen X in terms of the numbers buying at the same age, although 25% US young people are leaning on parents for the down payment, and this kind of help has become more and more of an expectation since the pandemic as prices surged. I’ve also seen data that says that more homes were purchased last year by the Silent Generation (those in their 80s/90s now) than by Gen Z. Like the UK, there is an increasing number of Gen Z purchasing with siblings, which perhaps hints at where the downpayment is coming from.
The Great Wealth Transfer in the US is HUGE (and growing)
The Great Wealth Transfer in the US (that is the projected amount of family wealth to be transferred down the generations) was not long ago estimated to be $48 trillion, but now, due to rising values of assets and equities, estimated to be around $124 trillion, which is more than all the world’s public companies combined. Around $2.5 trillion is transferred each year between family members, which is roughly the size of the entire UK economy. Perhaps more importantly, is the fact that this was far less, - $0.6 trillion - back in 2010. As these data visuals from Maria on our team show, this is a major driver perpetuating racial and income inequality across the US.
Wages may be bigger in the US, but parents are still footing the bill for everyday life
Silicon Valley has long treated London tech salaries as a kind of cut-price outsourcing — a running joke on UK X is to post US job posts with $100k plus salaries for ‘perceived low grade roles’, as reminders of how “cheap” European wages are compared to American ones.
Yet the flip side is that the cost of living in the US is comparatively high - in New York it has reached the realms of absurdity. I didn’t have a cab ride that came in under $50. Dinner for one? Forget it, even the most casual meal seemed to edge towards $80. For Gen Z across all American towns and cities, the crunch is clear: nearly half don’t cover their own housing costs, with parents stepping in to transfer an average of $1,800 a month just to keep their kids afloat, covering everything from phone bills to college repayments. Significantly fewer US adult children live with their parents post-25 than in the UK, but that doesn’t mean that they are not funding them.
Note the consistent gender dependency gap when it comes to the Bank of Mum and Dad too. Sons are living at home much longer than daughters, both here in the UK and the US.
Generational Wealth is Aspirational, not Shameful
If you are, like me, an avid watcher of Love is Blind, you’ll know that young Americans talk about generational wealth quite openly, not just as a nice-to-have but as something to build, to marry into, to aspire towards. It’s part of the cultural script: the American Dream has never only been about one generation “making it,” but about laying down enough security for future generations to climb higher.
In the UK, by contrast, I can’t recall hearing anyone use the phrase “generational wealth” unless it was a sneer. It’s almost always deployed as an accusation, a way of undermining someone else’s success by implying they had invisible scaffolding. This is partly the legacy of our aristocratic class system: because inheritance and landed wealth were historically concentrated at the very top, we like to imagine that everyone else is now playing in a meritocracy. Parental help, in most people’s minds, is for “poshos,” not for ordinary people (which is why I told my own story in the book).
Yet this is self-deception. The Bank of Mum and Dad now props up house purchases, education, and even day-to-day living costs for millions of middle-class families. The silence around it is cultural, not because the money isn’t flowing, but because in Britain we prefer to pretend that it isn’t. Gifting is also seen as a massive tax dodge (which if you are doing it explicitly to avoid inheritance tax, it kinda is) anyway, this further perpetuates the shame and silence.
Americans talk about money
I wrote a book arguing that we need to start talking about it, but in the US they already are. There is a more open dialogue about money in business and in families, but also in the courts. And because America is such a litigious society, lawyers are on hand to facilitate that conversation. Take prenups: 42% of Millennials and Gen Z in the US now have one.
Prenups are creeping into the UK too, but not on anything like the same scale. Here, they remain the exception rather than the rule, another sign of the UK’s cultural reticence when it comes to putting money matters on the table.
There’s little inheritance tax, which means less gifting
In the US, the federal estate tax exemption has recently ballooned to nearly $14 million, with generous gifting allowances meaning the truly wealthy can pass on fortunes largely untouched. In the UK, inheritance tax bites far earlier, with the seven-year rule fuelling more lifetime gifting earlier. All of this means that in the US, there is more money transferred at the point of death rather than throughout the life of the parents.
US parents are really worried about their Gen Z kids…
The rise of the Bank of Mum and Dad in the US, as in the UK, has been fuelled by a growing fear that children will not enjoy the same opportunities as their parents. In short, it is the fear of downward mobility (which is shaping our politics, workplaces and culture at large). That fear is well-founded: middle earners, those making between $60,000 (£44,000) and $150,000, have seen the sharpest decline in their share of the US economy, reportedly dropping from 37% in 1992 to just 28% today. This squeeze is hitting Gen Z especially hard, as rising unemployment and the disruptive force of AI reshape the job market.
Some argue that helicopter parenting stems from graduate mothers wanting the best for their children as they sacrifice their own careers. But perhaps intensive parenting was born out of middle-class insecurity, a recognition that to hold onto their social position, their children would need to work twice as hard. And if that is the case, should we really be surprised that in a society where parental money matters so much, parental interference follows close behind?
The Reading Room
Newcastle Building Society’s new mortgage that bans parental help is not so much radical as it is a recognition of reality. It offers loans up to £350k with deposits as low as £5k. Financial services are adapting to the fact that most young buyers are locked out by high rents and costs, while government policy has barely touched the intergenerational divide. This product signals the fact that lenders are beginning to design around the inequality, even as the government avoids confronting it.
Quite an astonishing insight here, which states that thanks to AI and mass layoffs, the share of employees aged 21–25 at major public tech companies has been cut in half, dropping from 15% in early 2023 to just 6.8% by mid-2025. I remember working for one tech start-up client where the age of the workers skewed so young that they deliberately (and probably illegally) hired older employees.
The average worker at a large public tech company is now nearly 40, up from 34 just two and a half years ago. Millennials, not Gen Z, dominate the industry, presumably ruthlessly holding onto their roles through economic uncertainty and AI-driven disruption. The irony is stark: the generation most fluent in digital tools is being boxed out of Big Tech at precisely the moment their skills should be most valuable. Non-Valley companies should be on the hunt for these kids. Watch this space as I imagine the Gen Z AI bods will soon be clipping on the heels of millennials Altman and Zuckerberg.
And finally….
I’m speaking at the brilliant Backstory Bookshop in Balham, South London - if you happen to have a free evening and are South London based, do come along! Tickets available here.
Devoted readers of #itsallrelative might notice that this newsletter is a little late. Normal service resumes this Friday; apologies, jet-lag and a broken laptop derailed scheduling last week.
Eliza
I watched your interview on WhatNow and loved it.
Congrats on the Trevor Noah booking - sensational to see the idea take hold across the world.