Financial Considerations for Multigenerational Households
For many families, and in many cultures, multigenerational living is a cherished aspect of home life, improving a family’s overall wellbeing. Research indicates there can be financial benefits to multigenerational living, and when executed intentionally, having multiple family members under the same roof can help improve health outcomes, reduce loneliness, and bolster educational outcomes for children.
While multigenerational living has many positives, it also comes with a unique set of financial and planning needs. Below are some financial considerations for people living in multigenerational households and those considering moving in with family members.
Helping to build family wealth
In a 2022 study, the Pew Research Center found people in multigenerational households less likely to live in poverty, and some multigenerational households had more earners than the non-multigenerational households, which can provide a safety net.
Having diverse financial needs
Savings and budgeting plans can be more complicated because of the wide range of ages among family members. Seniors might require more for health care and retirement, for example; children can bring daycare and tuition costs. Plans should be flexible to accommodate different saving and budgeting needs. Set short- and long-term goals for your savings with all generations in mind.
Expenses should be handled with fairness and equity
Multigenerational households have to ensure fairness by dividing costs such as mortgage or rent, utilities, groceries, and household expenses based on each member’s financial capacity and usage. Family members should openly discuss financial contributions and expenses.
Find balance between cultural values
and financial health
Cultural traditions can also play a significant role in money management, and it’s important to consider how multigenerational living can impact family wealth. Cultural heritage can shape financial attitudes and practices in multigenerational households, including saving habits, investment strategies, and perceptions of wealth.
Communication is key to managing conflict and disagreement
The more people living in a home, the more likely they’ll face conflicting financial priorities. Maintaining financial stability in multigenerational households requires
navigating disagreements over spending habits and adapting to changing income levels or unexpected expenses.
Future planning is vital
Estate plans should be tailored to accommodate the financial needs and goals of each generation in the household.Strategies should be developed for transferring ownership of businesses or properties to ensure continuity and preserve the family’s legacy. Make sure to compile essential legal documents—including wills, trusts, powers of attorney and health care directives— to outline the distribution of assets and clarify end-of-life wishes.
The bottom line
By addressing these considerations holistically and prioritizing open discussion and collaboration, multigenerational households can build a solid financial foundation, helping them achieve prosperity and security for their family members now and in the future. Read more about financial considerations for multigenerational households at chase.com/theknow.
