Financial planning guide for multigenerational households

Living with multiple generations under one roof can be financially efficient and emotionally rewarding, but it can also introduce significant financial complexity. Whether you're supporting aging parents, welcoming adult children home or building a multigenerational home by design, thoughtful financial planning is essential.

Open communication and a well-structured financial plan are key to protecting family wealth and preserving harmony in a multigenerational household.

How has multigenerational living changed over the years?

Multigenerational living has grown steadily over the past five decades. Since 1971, the number of Americans living in multigenerational households has quadrupled. According to a Pew Research Center report, 18% of Americans now live in homes that include two or more generations.

For many families, the reasons are practical.

• Forty percent cite financial considerations, while 33% point to caregiving duties.
• Pooling financial resources can increase household income, provide protection against rising housing and childcare costs and reduce overall financial strain.
• Multigenerational support can be especially impactful for those balancing both eldercare and child care.

The motivation behind living together often shapes the way a family should approach financial planning. A family that welcomes a retired parent for caregiving support, for example, may require a different planning framework than a family living together mainly for cultural reasons.

How does culture influence financial planning?

For 28% of Americans in multigenerational households, living together is rooted in cultural tradition. In many collectivist cultures, supporting extended family—financially or otherwise—is an expectation, not an exception. Wealth is often treated as a shared resource, and financial decisions are made collectively.

This dynamic can add complexity to planning. Decisions that affect assets, investments, household finances or caregiving often require buy-in from a larger group, and shared businesses or properties may require additional layers of coordination.

Conversely, families for whom multigenerational living isn't customary may face a different set of challenges. Individuals accustomed to managing wealth within a nuclear family structure may unintentionally shoulder additional financial responsibility—such as a retiree absorbing costs when an adult child returns home. In these situations, clarity and communication become essential. Setting expectations, discussing shared expenses and establishing boundaries can help maintain financial stability and family harmony.

Budgeting strategies for multigenerational households

Budgeting for a multigenerational family often requires additional structure and communication. Frank conversations, clear boundaries and consistent follow through can help ensure everyone feels informed and aligned.

Here are ways to help your family create an effective financial plan and maintain a harmonious household.

1Set and communicate expectations

Setting clear expectations is key to avoiding misunderstandings or conflict, especially when the choice to live together is driven by financial or logistical needs rather than cultural norms. Discuss housing costs, groceries, child care, eldercare and other shared expenses upfront. Also clarify how much and how often each family member will contribute, and establish boundaries around responsibilities.

2Create a shared household budget

It's also important to maintain a comprehensive budget that reflects shared expenses and the resources available to cover them. Determine contributions based on income, assets or negotiated agreements, and assign clear roles for managing ongoing expenses. Also consider automating transfers into a shared household account to help streamline payments and reduce friction.

3Hold regular family meetings

If your family shares resources, ongoing communication is just as important as initial planning. Regular family meetings can help address evolving needs, ensure transparency and keep all family members engaged in decision-making.

4Map out resources and support needs

When issues affect multiple family members, outline the scenarios and resources required.

• If an elderly family member becomes ill, who will provide care?
• What is the plan for long-term care, and how will it be funded?
• If multiple people contribute to the household budget, what happens if one of them loses their income?

Clarify these details and documenting expectations in advance to help reduce stress and confusion during challenging times.

5Put documentation in place

Key estate planning documents—wills, trusts, powers of attorney and health care directives—are essential for multigenerational financial planning. They outline decision-making authority and guide asset distribution, which are especially important when resources are pooled. Review beneficiary designations and asset titles regularly to ensure they align with the family's plan.

6Develop a clear succession plan

Families that live together for cultural reasons are more likely to engage in joint investments or business ventures. This introduces additional planning needs, particularly around succession and estate planning issues. If a family business is involved, develop a clear succession plan that ensures business continuity, establishes a process for resolving conflicts and identifies the skills and knowledge future owners will need. This can help preserve family harmony and ensure the business will continue to operate effectively.

The bottom line

Multigenerational financial planning must account not only for assets and liabilities but also for family customs, expectations and communication styles. Regardless of your approach, it's important to have clarity around shared resources, responsibilities and long-term goals. By articulating your philosophy early—and engaging the support of a wealth planner—you can build a financial plan that supports stability, harmony and long-term prosperity.