The Secret Economy No One Wants To Admit To, with Dr Eliza Filby

Hello and welcome to a little bit richer with me, I own a vein brought to you by legal in general. Now, for many of us, we grew up believing in a meritocracy, where hard work brings rewards. You grow up, get a job, put in the hours and things will work out. But the reality is that the opportunities are no longer shaped by what we learn or earn, but by whether we have access to the Bank of Mom and Dad. We're living in an inheritocracy, where parental support is what matters most, whether that's covering the cost of university, gifting a house deposit or helping with childcare. With trillions of pounds set to be passed down the generations over the next two decades, a significant divide is emerging between those who can rely on family wealth and those who can't. Joining me today to unpack this, if you do, or don't have the Bank of Mom and Dad to lean on, is historian, author and generational expert, Doctor Eliza Philby. Eliza's writing has been published in The Times, The Guardian and The Financial Times, and she's recently published her latest book in Heratocracy. It's time to talk about the Bank of Mom and Dad, so there is no one better to talk to today. Welcome Eliza. Great to be here. So your work over many years has been highlighting the real financial challenges affecting millennials. Can you give us a whistle stop tour through those challenges? Yeah, I mean, I think I like to call the millennials like the Inbetweeners because we're literally straddling two centuries, right? In many instances and many respects, we grew up with that sort of late 20th century dream of, let's get as many of you to university, let's kind of instill this belief, a meritocratic belief that education is the path to opportunity. By the way, we're going to charge you for that degree, so this idea of education being the path to opportunity was very much kind of combined with, okay, the value of that degree is actually going down because more of us are getting them and the price of that degree is actually going up. So that was the first dent in the dream, and then the sort of, the second part of the dream was, you know, get a professional career and get that sort of on that track to financial stability, home ownership and financial sort of well-being. And we know the car crash that is, the housing market and frankly has been really since 2008. And so the story of our generation is a level of frustration, the fact that things haven't quite worked out in the way that we thought, or certainly we were told they would, you know, many of us entered the workforce in the aftermath of the 2008 financial crisis and have seen multiple shocks since then, where wages basically have stagnated, right? Because certain things have become cheap, travel, technology, eating out, right? But the really big ticket items in life have become incredibly expensive, you know, and we're not just talking about housing, we're talking about renting house and buying a house, of course. We're also talking about the cost of education and also the cost of childcare. So the access point into adulthood, when you need to purchase a house or make the big decisions in your life, what's really happened to our generation is not that we've been able to do those things, is that some of us have, if we've had access to the Bank of Mum and Dad, and those that haven't have really struggled. I make the distinction between, yes, there of course is a divide between those that went to university and those that did not, and we've madly created an education system in which we leave 50% behind as it were. But also there's another layer, which is really evident in the middle class, between those that have the Bank of Mum and Dad and those that don't. And that's created a inheritoxy where it increasingly is dependent on who your parents are, whether they can afford to support you. Yeah. That's a very, very blunt analysis, but I think it's one that people watching and listening will really recognise, and you're really hitting now on the head when you talked about expectations. Because objectively, we are living through an era where we have pretty good living standards, but the problem is what people perhaps expected when they were younger, it's not really turned out that way for them, even when they've been well educated, they've worked hard and they've got what most would consider to be a good job. And that is perhaps the reason why there is that tension between younger people and older people who look at today's consumer landscape and say, well, come on, you guys have got it good. You've got the world's information in your pocket. Absolutely. I think you're absolutely right. It's misunderstanding that material conditions have improved undoubtedly, but it's that expectation and that failed expectation where the frustration is, and it's particularly acute amongst people who have done very well in the education track. And one of the reasons why I wrote the book is that basically I got to 32 and I grew up in, ostensibly, a working-class household, certainly culturally, although we did own our own home and that was because my grandfather won it in a car game, but we've had this real pressure from my parents get to university. I was the first person in my family to graduate. I really did believe the education was the great opener of opportunity. And I believed it so much that I did a BA, an MA, and then a PhD. And I got to my early 30s and I was on a quite an appalling wage, about 10 grand. I had a part-time cleaning job, and I was only able to basically survive because my parents have made some seriously savvy property investments in the 80s. So my mum, with her sister, had bought a five-bedroom house in two-ting for £28,000 in 1981, worth a lot more now. So painful just to hear that. Exactly, but I mean, you know, we need to hear that. Because she'd also subsequently bought a house with her next-door neighbour, and say, by the time I was in my early 30s and expecting to be independent and making big decisions and thinking about babies and all this stuff, I wasn't able to, even though I'd succeed in the education system, and I was only able to, frankly, survive and had an embarrassing level of dependency on my parents, because they had, basically, become paper-millionaires through property. And I think what I was just wanting to explain was how that came about, what happened to the baby boomer generation in how they were basically under certain conditions, able to accumulate good pensions, and now we have that significant wealth in that generation. And what happened in our generation where things went a bit wrong, the education, although still important, was generating declining rewards. And big cities became basically closed areas for people that didn't have parental support. And childcare becoming exceedingly expensive and marriage increasingly dependent on banks of mum and dad, and financial unions being less based on shared educational attainment, it used to be that graduates, married graduates, my evidence in the book suggests that people are increasingly uniting one bank of mum and dad through marriage with another bank of mum and dad. So I was like, beginning to see the inheritocracy playing out in education, childcare, marriage and dating, and obviously the workforce and housing as well. And essentially, the bank of mum and dad, we often say, is to do with a house deposit. It's dependent on two things. Number one, the time at which you get that kind of support means you can invest in a property it compounds with over time. The earlier you get that inheritance or gift, the more independent you can become and the more basically financially set you are. You paint quite a bleak picture there, especially of people getting together on the basis of whether someone's parents have got enough wealth to support them. And that almost takes us back to the era of Jane Austen when you would consider your partner based on their financial stability. Would you say that that is playing more and more of a role in our relationships and our big life choices? Yeah, I mean, I don't want to put it too crudely and I'm a romantic, right? I do believe in romance. I'm not saying that romance is dead. I'm just a thought. No, exactly. I'm saying that there is an economic rationalism happening in the dating scene that's less to do with algorithm and more to do with money. There is evidence that interclass marriage is declining and there's also evidence that women are more likely to see their inheritance as their own and see their finances as their own and not a co-joining of finances through marriage. But there's also evidence of moms and dads when their offspring are getting married seeking to protect their wealth, maybe through pre-naps, certainly getting much more involved in that conversation. And there's this whole theory and sociology about assorted mating, this idea that graduates mostly tend to marry graduates. And that was very much the kind of emerging picture in the '90s. And there is evidence from the Resolution Foundation that there is less graduates marrying graduates and that being the key determiner and more wealthy people marrying wealthy people. And so I don't want to overstate the sort of Jane Austen-like selection process that is guiding the contemporary marriage. We did some polling in the book, asking people how important do you think financial compatibility is in a relationship for determining the success of a relationship? Now we know money is one of the chief reasons, if not the most important reasons, for divorce and separation. But what's interesting is when you look, you broke down the question by age, Gen Z, and millennials thought it was more important than boomers and Gen X. So you see this sort of gradual, increasing understanding, the lower down the generational scale will go that money and financial compatibility is important. And I think that we've grown up in this idea of romantic rom-coms, just find my significant other. And it's interesting in the cost of living crisis, in a financially precarious environment, financially, financially independent women are being much more rational. It's not, let me marry a guy in finance, you know, that's the kind of TikTok sensation. It's financially, not dependent women arguing this, independent women going, this has to be a core part of the conversations I have with my significant other, and potentially even how I date. And that seems to be a really massive shift compared to previous generations. And it has its upsides in terms of us having a generation of women who are more financially independent, who are making their own decisions, who are actually in line for some of this inheritance, which they wouldn't have been previously. Can you just talk us through that shift? Historically, there's always been inheritance, right? There's nothing new. What is new is the amount of money that's trickling down, right? There is an extraordinary amount of money in the boomer generation and Gen X as well, trickling down to millennials and Gen Z. But really for the first time in history, it's going to daughters as much as sons. And so, therefore, you've got this twin impact there of the rising independence of women, you know? And that's not a millennial story. That's really starts with the boomers and then with Gen X and then increasingly with millennials and now Gen Z. But then the gender equality around inheritance. But we are in a new era, so combined with rising female financial independence, that's made women's economic position ever more important and actually key in this not just great wealth transfer. You could argue it's a great gender wealth transfer. And is that partly because attitudes have changed or is it more a reflection of the fact that we need to be able to pass on that money to daughters as well as sons or perhaps both? When you look at education and now the workplace, women are doing better than men. Girls are now 28% more likely to go to university than boys. There's evidence to suggest that young women in their 20s are out earning men in their 20s. And that's an indication of women working really hard, but also obviously a level of equality for women in the professional workplace. That has meant that people don't see investing in daughters as risky or money that eventually goes to a husband. A lot of the trends that you've talked about, they might feel quite uncomfortable for people, but do you think that some of the stigma and taboo around this subject is disappearing? Or do you think that people are still a little bit reluctant to acknowledge that this is what's going on? Yeah, I mean, I call the book a deliberately provocative title in herotoxy, but the sub-titles really important is time to talk about it, because I don't think we really have the legal in general, actually. Their reports on the Bank of Mum and Dad were instrumental in bringing into the conversation this Bank of Mum and Dad. And there was a lot of shame, still is a lot of shame on that parental dependency. There's a lot of unsaid whispered how to cheer for that deposit, you know, all that kind of stuff in friendship groups. There's a lot of silence in families talking about gifting, talking about dependency, certainly about inheritance. There's a level of economic infantilisation that a lot of people feel when it comes to their parents. I think we need to talk about it, we need to be much more open, both if you're in a privileged position of having the Bank of Mum and Dad, but also if you're not, you know, actually creating a greater level of empathy amongst your friendship groups and saying, do you know what? I can't spend £2,000 on attending your hen party and wedding because I'm not in the position that you are. And I think talking about it in your peer groups, but also talking about it within your family and also talking about it in society because one of the things that I'm really passionate about is helping people understand the social and economic forces that actually govern their lives. And I think basically what's happened since 2008 to 2025 is that the state has shrunk, the markets become dysfunctional and the parents have stepped up, stepped up from a point of love. And I'm not someone that believes that inheritance should be taxed into oblivion. It's about creating and having a conversation where inheritance matters less and an economy where inheritance matters less because ultimately it's demotivating. And interestingly, and we did a big survey asking people, do you think we live in an inheritance overwhelming majority said, yes, but tick him, actually, young people. Do you want to talk about it? The category in society that does not want to talk about it, the least at all is men that earn over £100,000. Interesting. I'm assuming here they don't want to talk about it because they feed off of that kind of self-made myth and are somewhat embarrassed that there is a degree of parental dependency. So ironically, the higher up the income scale, then less likely people to talk about it but more likely to be dependent on it. And maybe sometimes they don't want to admit that to themselves because we all want to think that we've got to where we are in life. And that was me. Absolutely. That was me. I was so intelligent and hardworking and working class, you know, I mean, just a joke, there's kind of story I used to tell of my life. And I tell that story in the book and I'm like, it was all rubbish because actually, when you look into the nuance here, yes, I was the first person in my family to go to university. Yes, I came from somewhat dingy part of South London, certainly in the 80s, less so now. And yes, I was someone who, my father, his final job was a cleaner. You know, if you look at the metrics, I was someone who didn't have a lot of privilege. Actually, the most important part is that my parents had generated a property portfolio when it was affordable for them to do that. And by the time I was in my 30s was an awful lot of money. And what about those people who don't have that kind of good luck? What are they doing now to try to get on the property ladder given that that does seem to be quite a big driver still of people's long-term wealth? Yeah. And it's a really important point. Something that I wanted to do in the book was tell my story, but not only tell my story because my story was one privileged white girl in South London, right? So we sort of unpick a lot of stories in the book of people who subverted the inheritoxy. I call them the meritocratic millennials. And there are a lot of people who are, in many instances, without the bank of mum and dad doing very well. So what's the commonality there? Number one, they don't have in London, right? And quite often not in a big city. Number two, they did stem subjects, not arts and humanities subjects, like me. That may change with AI. But certainly the reward on those degrees is higher than the reward on arts and humanities degrees. Number three, they're often supporting their parents. We assume, and we're talking about money trickling down the family tree, for these meritocratic millennials, they are supporting their parents. And actually that creates a level of interdependency that they benefit from as well as sacrifice for. Number four, and I think this is really important, is that most of them are in dual income households. Right? So 70% of millennials are in dual income households. And that becomes complex when you have children, obviously. But if you have the wider family network, and that's the fifth commonality, you then can basically have help when it comes to childcare, and potentially you help when it comes to elder care. So it's a much more, I would say, intergenerational economic support system, rather than just the Bank of Mum and Dad gifting down money. And it's not just about the Bank of Mum and Dad lending to children for their house deposit as well. How else do families know support their kids in this environment? There's a full breadth of support coming from Mum and Dad, and sometimes actually grandma and grandpa. And that can be helped with education in its various forms, university, but also tutoring, extracurricular stuff, then help with rent, help through the mortgage rate crisis, help with the cost of living, also childcare. There's several examples of the book where lots of people returned back to the family home to say for their own deposit, parents didn't charge them rent, and lots of parents wanting to do that and accommodating in that way for their children, because they realized they couldn't give them that cash injection that perhaps others were able to. So I think it's important to see the real breadth of ways that people are dependent on their parents. Yeah, we're becoming a bit more like Italy, where it's always been fairly normal to kind of have intergenerational living, certainly more normal than in the UK. And we are seeing the financial industry start to respond a little bit to these challenges and trends by coming up with products that could start to help those who don't have the bank of Mum and Dad. I mean, I'm starting to see, you know, interest free mortgages come back, whether that's a good thing or not, it's up for a debate, also 100% mortgages, and for those that have been paying rent regularly, there's a product. Yes, that's right. So you can get a five year fixed rate deal with a 100% deposit, so long as you can prove that you've paid your rent on time in the past few years. Now, to some older folks, that might seem a little alarming, but for younger people, that could be one of the only ways that they get on the property ladder without that parental support. And also, I think, you know, mortgages are calculated on wages, and people have multiple streams of revenue now. So actually, mortgages and products in respect to housing need to really adapt to how people's financial situations are changing as well. Because if house prices are still way out of kilter with average wages, how on earth are people going to bridge that gap? Exactly. And are you seeing any signs that changes to the housing market in recent years, such as stamp duty going up in lots of parts of the UK, that that's having impact on people's decision to buy property? Absolutely. I think it's crippling if you are wanting to move up the ladder, as it were. I think we need more fluidity and more movement in the housing market and stamp duties, the obvious way of perhaps injecting some of that. I completely agree. It just feels that the whole process of buying a property now has got far more complicated on so many different fronts. And actually, it speaks to a broad point, is that we talk about the Bank of Mum and Dad, like there's naturally a mum and dad. And of course, in many instances, there's a blended family. And that brings a new layer of complexity. And we shouldn't make assumptions that people have, are naturally sort of emotionally straightforward relationship with their parents. Many don't. And I lay out some examples in the book where there was a lot of sort of fraught issues around either accepting money or talking about money or approaching your parents around the issues of financial help. And so I think it's really important to recognise that families are complicated. And when you add money into that equation, it's not straightforward. And yes, a lot of parents are gifting from the position of love. A lot of parents are helping in other ways from the position of love. But it can be highly fraught, highly complex, the very opposite of straightforward. And then also perhaps people feel that if my parents give me money, maybe they're expecting something back from me later on in life when they're older and they're not in a position to look after themselves. Yeah. And I think, you know, someone said to me, I think we're becoming more Asian as a society. And that speaks to that high idea of intergenerational contract that the parents look after the children and eventually the children parent, the parents as the parents age. And certainly that's what has happened in my family. But you do eventually parent your parents. That comes with a level of complexity if we're all sort of living longer with illnesses and people require a lot more care in their older years. More women are working. And I'm afraid to say elder care still relies and falls on women. Absolutely. For women in their 50s and 60s leaving the workforce, elder care is becoming a really, really key issue for them. And also financially, how do we parent our parents when we're potentially not in the financial position that we would like to be at that age in our lives? We can't parent ourselves. Exactly. Right. So I think elder care and looking after our parents is something you do, not out of obligation because they gave you a deposit, but out of love, it can be complex, of course. But it's also something that does involve a financial discussion. And there's a lot of parents wanting right now to help their kids in their 30s. They're thinking far more about helping their kids buy a house than thinking about how they can deal with their own and fund their own social care. And that is a conversation we don't want to have in politics. We don't want to have in families. And even we probably don't want to have with ourselves. Definitely something that needs to change. And are you also seeing evidence of people looking for support from friends or siblings or other family members? Do you know, I didn't, I did find a lot of tension about from people that had lived in bicellettes where their friend was effectively their landlord. Yes. And that tension of my rent is paying basically into their inheritance pot. Yes. I can imagine that dynamic. Yeah, yeah, yeah. That's messy. And a lot of conversation about the financial inequality within friendship groups. And how there's a sort of leveler at university. So a certain degree sort of everyone sort of broke in their 20s. And then you get these kind of super shooters who then kind of like catapult into adulthood. Yeah. And that's because of the Bank of Mom and Dad. And I think the other thing to say, and this is really evident in Gen Z, less so I think in millennials, is a financial savviness. I think Gen Z, I've looked at millennials going, you went really hard. You made your job your life and you still can't afford a house. Yeah. Right. And they've grown up with a very different attitude towards money and a very different obviously social media landscape that enables them to self-educate to a certain degree, particularly around investment. So it was interesting since 2018, the super surge of Gen Z is investing. Yeah. I didn't do that in my 20s. You probably did. No, I was a bit of a late comment too. And I think it was because of this perception that I had to have everything else in my life kind of sorted out before I could progress and mature to that stage. But yeah, I'm seeing the same with younger people where they're thinking, "I can't really afford to play safe with my finances, but if I invest, I can maybe play to win." And perhaps you can get together enough money to get a deposit for a property, which is a real shift in that situation. And I think the reason for that is, yes, the economic turbulence they experienced post-COVID cost of living crisis, a sort of acceptance in a way that millennials didn't have, that they're going to potentially live at home longer, hotel of mum and dad, which affects working class families, as much as middle class families, that is a definite trend. And I think devoid of some of the shame that they had in the 2010s with millennials, I think also they don't believe in wages alone. And they're right not to. And this is the key point is that wages and our jobs don't bias what it brought our parents. Okay? Depending on what obviously your parents did. But let's just remember that baby boomers, not all, of course, had access to decent pensions, increasing professional wages and affordable homes. And Gen Z, no, they don't have access to any of those names. And so they have access to auto enrollment, which is actually a really interesting sort of backstop. But this generation is thinking in terms of multiple streams of revenue, in terms of investment, in terms of I think, and this is the key point, is as housing has become increasingly a long-term saving goal, and potentially a long term, maybe 35 year mortgage, long-term investment, people are thinking of housing not as a ladder, but as one destination. So you look at millennials because they're buying well into their 30s, they're not getting a flat. They're getting a family home. Yeah, they're skipping that first wrong because actually millennials are wanting family homes that will set them up for 10, 20, 30 years. And so they've adapted accordingly. And then when you look at Gen Z, the attitudes towards housing is less, this is going to be a savvy investment, more is it even obtainable. Now they're in a certain life stage where they're thinking differently, and let me say obviously when you have kids like suddenly having a fixed abode where you're not subject to the whims of the run, yet exactly becomes super important. And let's also remember that buying house is inaccessible for a large proportion of population. But I am seeing Gen Z is thinking very differently when it comes to buying house. That is giving me some hope because where I think what you do and what I do where we meet is that you talk about these wider issues in the hope that people don't feel bad about what's going on out there, maybe outside of their control, and where actually I come in is trying to help people understand what is in their control, even if it might be not what they would have conventionally done in the past and how we need to evolve and adapt sometimes to meet these challenges. So I'd be really interested to know, what are your kind of three tips if you can distill it all down into three tips for folks who maybe don't have access to the Bank of Mum and Dad, and they're wondering how can I build up some of this security and resilience for myself. Number one is don't blame yourself. I think it's not you, it's the system, and hopefully my book goes some way to helping people understand the broader economic forces out of their control. So don't internalise that sense of guilt and failure. Number two is financially educate yourself, and I think that people like you and just as so many people out there on social media, but also your parents and your wider peer group is just start talking about money, start finding out about money, start that educational journey of self-knowledge. It is nothing but empowering, and I say that as someone who had a lot of shame around money and a lot of complex issues around money, education is empowerment. And then the final thing is take the first step, and I'm sure you would advocate for this, is like it's all about time, ironically, rather than money, and rather than sums, and it's the wonder of compound interest, and actually taking small steps now means that you're 50, 60, 70 year old self, well thank you, but it's also just actually building that confidence in small steps. And I think that's really it, rather than me advocating for a certain nicer, I think those three things are get rid of the blame, get empowered by knowledge, and take the first step. They are fantastic tips, Liza, thank you so much. Key. She's been great to get an understanding of how these dynamics have shifted and what we can do about them. If this episode is part of conversation that you want to have with friends or family, I'd love it if you could share the podcast and help others get a little bit richer too. This podcast is brought to you by LNG. You can keep up with the show on YouTube, TikTok, and Instagram @LegalInGeneral. Until next time, see you soon.