Financial planning for multigenerational families

Part of our tough money questions series

It’s been a growing trend for a number of years. By 2016, a record 64 million Americans, or 20% of the population, lived with multiple generations all under one roof, according to an analysis of census data by the Pew Research Center.

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.

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

Or a family just prefers to have three generations living together, sharing in the household responsibilities and expenses, and supporting one another through life’s ups and downs.

When you have a multigenerational family, financial planning has a few different twists. Start by considering the financial needs of each generation.

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,” says Inaam Abdel Jaber, a Principal® financial advisor in El Paso, Texas. “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 6 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 pay for 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.

Every situation, every family, is different.

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

Your advisor 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,” Abdel Jaber says.

Next steps:

Want help?

Find an advisor near you to help you build a personal financial plan. 

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 Abdel Jaber, Principal National and Principal Life Financial Representative, Principal Securities Registered Representative and Financial Advisor.