An increasing number of American families (some 18% of the population) are finding that setting up a multigenerational household—one where children, parents, grandparents and even great-grandparents all live together under one roof—is the best solution to a host of difficulties. And it can certainly ease financial, physical and emotional needs. But if you're the adult generation sandwiched in the middle, there are new challenges as well. Here are a few financial tips to make the transition easier and keep it positive—both monetarily and emotionally.
Have Money Talks. Families tend to not want to discuss money matters, but a multigenerational household needs to be more open because financial problems and challenges affect everyone's home and future. Set up regular quarterly meetings as a family to discuss things like how the costs of the shared home are being met, what savings goals the family has, what financial priorities are coming up in the future, maintenance needs on the home and any concerns about inequality. Make these meetings open and nonjudgmental, and be sure that everyone's opinions and concerns are treated fairly and given value.
Keep Your Priorities. Taking in adult children or aging parents often results in additional costs for you as the homeowner. But these must be balanced with your own needs—both current and future. Some parents sacrifice retirement savings, for example, by putting their extra money toward college costs for adult children living at home. However, it's important to keep in mind that providing for your own secure future is one of the best ways you can help your children later in life. This is a good time to discuss your priorities, needs and goals—as parents and as a group—with an objective professional such as a financial planner.
Discuss Expectations. Adding a financial aspect to family relations can cause a lot of new emotions and conflicts. Understanding what everyone expects to give and receive in this new arrangement can help alleviate much of this. Does an adult child moving home expect to have to contribute a set amount to the household or not? Do you as parents have different expectations? Is Grandma going to need a lot of physical caregiving, and who will be providing it? Does she have ways to meet her own financial needs or will adult children be expected to chip in? How much does each family member expect to contribute to the house—both physically and financially? Questions like these are best answered up front so that everyone is on the same page.
By having open and frank talks such as these, you can help ensure a smoother adjustment to living as one big, happy family. Both your finances and your family's sanity will be healthier for it.