Did you know that over 60 million Americans are living in a home with either grandparent, grandchildren, or with two or more adult generations? That’s nearly 20% of America.[i]
Whether it was planned or not, you may at one time be living in a multi-generational household. Kids may need to move back in after college. In fact, over 36% of 18-31year olds are living at home.[ii] Forty-seven percent of adults aged 40-50 have a parent 65 or older and are still raising or have adult children with financial needs.[iii] Whether it’s the cost of living increases, childcare needs, health issues, or a job loss, the trend of moving into a multi-generational family home has been on the rise since 1980, hitting a high point during the 2007-9 recession.[iv] Whatever the case, living in a multi-family household can be an enriching and positive experience. This article will go over some ways to streamline the process so that it is beneficial to everyone.
Communication is key to pretty much everything in life. Before anyone cohabits, making sure there is a good back and forth and openness to communicate will make all the difference. Outline household budgets, house expenses, utilities, etc. If a child is moving back in after college, for example, you may want to have them pay rent or a utility. If an elder parent is moving in, understanding what their financial situation is, and if they can contribute or if you will be supporting them will be vital information. The more everyone enters into the household with an understanding of the expectations, the smoother things will run. Good communication will also help when things need to change, for health reasons, a job change, when the household system may need to be modified. Building in some flexibility into the family budget will also help smooth conflict.
Put Yourself First
We’ve all been on an airplane when they tell you to put on your oxygen mask first right? Living in a multi-generational household has similar rules. You need to take care of yourself, especially if you are the breadwinner supporting a family. Having padding to cover an unseen major expense or a loss of a job is the difference between a bump on the road and a full-on disaster. So, make sure you have a flush emergency fund and are taking advantage of any workplace match 401(k) or savings programs. Be honest with your family about how much you can comfortably cover and don’t overextend yourself. Caregiver burnout is a real thing with symptoms like depression, exhaustion, and health problems.[v] You can help support the younger and older generations but it is imperative you are also preparing for your own needs, health, and future at the same time.
Kids Are Expensive
Some big expenses you can plan ahead for, like college. If you live in a multi-generational household it may make sense to set up a 529 education savings account where multiple family members can be contributing funds toward schooling. 529 plans are a great, and often underused, way to save for school. Unfortunately, only 29% of Americans even know about them.[vi] The benefit of a 529 is that the money is secure, grows tax-free, and is earmarked exclusively for education. Encouraging your children to also put some of their earnings or gift money into the account can teach them valuable saving skills and help them understand how expensive college can be. Besides college though, children come with a lot of added costs: from sports, to dance recitals, field trips, and the newest designer shoes, costs can add up. In a multi-generational household, it may be worth pooling resources to cover some of this expense as well. A grandparent on a fixed budget may not be able to take on half the mortgage, but they may be able to put a small monthly amount in a college fund, or toward soccer cleats or a retainer.
Prepare for the Needs of Older Family
Having older members in the house, much like children, will mean changing needs and expenses with time. Understanding the financials that they are bringing in is most important. Discussing health insurance, wills and estates, power of attorney, and long-term care goals is a necessity. While these conversations can be difficult, the more you know the better prepared you can be and the better off everyone will be. While your elder parent may live with you, you may be unable to provide the level of care they need, so talking about bringing in a home health aid, or nurse may be the next step. Discussing sharing the expenses with other siblings who may not live with you is one option to help lighten the load and share the cost and labor. Like mentioned above, it is vital that you put yourself first and make sure your needs are being met, as well as the members of your household. Burning yourself out or emptying your savings won’t really help anyone in the long term. Which is why it is so important to talk openly and often, get as much in writing as possible, and share the expenses as much as possible.
Get Outside Help
Every family and living situation is totally different. For that reason, it may behoove you to seek the advice of a qualified financial advisor to help navigate your unique living situation to create the best financial plan for you. Having an expert review your life insurance policies and disability coverage can give confidence so that if anything happened to you, you know your family will be safe and protected.