Part of our tough money questions series

Photo of a multigenerational family who have considered the needs of each generation in their financial planning.

Financial planning for multigenerational families

It’s been a growing trend for years. And in 2020, 2.7 million adults in the U.S. moved in with a parent or grandparent in March and April in the wake of the pandemic.1

Sometimes adult children move home while they work and pay off student loans. And at the same time, Mom and Dad are supporting their own parents.

20% of the population lived with multiple generations all under one roof by 2016.2

Or a favorite aunt moves in with her niece’s family, taking on the role of child care provider while the parents work.

Inaam Ziyadeh, a Principal® financial professional in El Paso, Texas, provides a unique perspective when she helps multi-generational clients with financial planning: She lives in one herself. She and her husband, five children (three in college, one in high school, one in middle school), and her 91-year-old mother are all under one roof.

“When you have a multigenerational family, financial planning has a few different twists. You start by considering the financial needs of each generation,” she says.

Take care of yourself first.

Why is that so critical? Because you won't be in the position to help other family members if you don't have a plan for your own financial security.

Continue saving for your emergency fund. Continue saving and investing for retirement. And continue to manage debt responsibly.

Plan for the expenses of the kids or grandkids.

Let's face it. They can be kind of expensive. Between band instruments, basketball shoes, and prom dresses, you may need to make decisions about the lifestyle you’re able to support.

And then there's college. “One thing you can count on is the costs, over time, are going up, not down. The key is to start early with a college savings plan,” Ziyadeh says. “Before you know it, they’re grown up. The longer you wait to start saving for their education, the more expensive it becomes to play catch-up.”

Of course, as they become teens, they can work part-time to earn their own spending money and save for college. (Or to cover the costs of the cell phone they broke twice in six months.)

And plan for the financial needs of older family members.

Start by having a conversation with them about their money. Understand their finances, their health insurance and any long-term care policies they have in place. If they don’t have the assets to ensure their financial security, consider enlisting the help of extended family, if possible.

Think about what other expenses you’ll have. For example, if older family members need caregiving beyond what you're able to provide physically, you may need to hire home health care providers.

Or you may even want to change your living arrangements, moving to a larger home or apartment, or adding onto your home.

“Multi-generational families often have aunts or grandparents who take care of the children in their household while their parents work, which is great for everyone,” Ziyadeh says.

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

Every situation, every multigenerational family, is different.

Consider talking to a financial professional who can help you with your own personal financial plan, making sure you consider the added responsibility of supporting other family members.

Your financial professional can also review your disability coverage and life insurance. “As the breadwinner, you have a larger family depending on your income. Make sure you cover all the gaps so your family is on solid ground, financially, if something were to happen to you,” Ziyadeh says.

Next steps

1 Zillow analysis of current population survey data (June 2020)

2 Pew Research Center analysis of census data (2018)

Insurance products issued by Principal National Life Insurance Co. (except in NY) and Principal Life Insurance Co. Securities and advisory products offered through Principal Securities, Inc., 800-247-1737, Member SIPC. Principal National, Principal Life and Principal Securities are members of the Principal Financial Group®, Des Moines, IA 50392. Inaam  Ziyadeh, Principal National and Principal Life Financial Representative, Principal Securities Registered Representative and Financial Advisor. 

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