Part of our tough money questions series

Photo of a multigenerational family.

Financial planning tips for multigenerational families

For people who live in a multigenerational family home, there can be lots of potential short- and long-term upsides to sharing daily life with children, parents, grandparents, or other relatives. And even before the pandemic, multigenerational family homes—defined as at least two generations living together—were a growing trend. In 2018 about one out of every five people lived in a household with at least two or more generations under one roof.1

52% of adults age 18-29 who currently live with parents2

Some families live in a multigenerational household because they want to—and others do because they need to. When a mix of generations live in one home, their financial pressures and goals may look different.

These four tips can help you keep track of what’s important to you—and important to your family, too.

1. Focus on your financial goals and needs—first.

Why is this so critical? Because you may not be able to help other family members if you don't have a plan for your own financial security. That includes:

You may not be able to help other family members if you don't have a plan for your own financial security.

2. Discuss roles and responsibilities

Adult children may move home while they work and pay off student loans. Mom and Dad may want to support their own parents. There are twists and turns to setting budgets and evaluating goals for each generation, and that may impact who pays for what.

For example, if one adult family member is job-hunting, maybe there are other non-financial ways they can help around the house. If everyone is working, create a plan for who pays for what.

“Multigenerational families often have aunts or grandparents who take care of the children in their household while their parents work, which is great for everyone,” says Inaam Ziyadeh, a Principal® financial professional in El Paso, Texas.

3. Save for immediate expenses for the youngest and oldest household members.

Kids grow out of clothes and grow into lessons and sports. Parents and grandparents may need caregiving or specialty medical attention as they age.

If you’re in a multigenerational household, planning and saving as early as you’re able for those short-term needs can help cushion your budget from unexpected impacts.

“But it’s important to set aside money in an emergency fund,” Ziyadeh says. “If a grandparent becomes ill and needs additional care, the family may suddenly have extra expenses to absorb—both day care and caregiving.”

If you’re in a multigenerational household, planning and saving as early as you’re able for those short-term needs can help cushion your budget from unexpected impacts.

4. Save for the future, too.

For kids, that includes college. “One thing you can count on is that college costs, over time, are going up, not down. The key is to start early with a college savings plan,” Ziyadeh says. “The longer you wait to start saving for their education, the more expensive it becomes to play catch-up.” Learn about 529 plans.

For adults, planning conversations can revolve around health insurance and long-term care policies. If they don’t have the assets to ensure their financial security, consider enlisting the help of extended family, if possible. That may entail a reevaluation of living arrangements, too, such as a move to a larger home or an addition to your current one. Read about tips for talking to your parents about money.

Every family is different, and that includes every multigenerational family, too. Consider talking to a financial professional who can help you with your own personal financial plan, including the needs you may have to support every member of your family. Learn more about working with a financial professional.

Next steps

1 https://www.pewresearch.org/fact-tank/2018/04/05/a-record-64-million-americans-live-in-multigenerational-households/

2 https://www.pewresearch.org/fact-tank/2020/09/04/a-majority-of-young-adults-in-the-u-s-live-with-their-parents-for-the-first-time-since-the-great-depression/

Inaam Ziyadeh, Principal Securities, Inc. Registered Representative.

The subject matter in this communication is educational only and provided with the understanding that Principal® is not rendering legal, accounting, investment or tax advice. You should consult with appropriate counsel, financial professionals or other advisors on all matters pertaining to legal, tax, investment or accounting obligations and requirements.

Insurance products and plan administrative services provided through Principal Life Insurance Co. Securities offered through Principal Securities, Inc., 800-547-7754, member SIPC and/or independent broker-dealers. Principal Life, and Principal Securities are members of the Principal Financial Group®, Des Moines, Iowa 50392. Certain investment options and contract riders may not be available in all states or U.S. commonwealths.