These days, it’s not uncommon for an elderly parent or adult child to share their home. But no matter how much you may love your family, having extra bodies in the house likely means other factors to include in your personal financial situation.
“Finances can be a huge source of stress [in multigenerational households],” says Amy Goyer, Aging, Home & Family expert with the AARP.
The more mouths there are to feed, the harder it is to make your money go the distance. While it’s great to lend extra support to your elderly parents or grown children, if you’re going to make your multigenerational household work you’re probably going to need to make some budget considerations.
1. Evaluate the needs of your new household
Before you can plan a new budget, you’ll need to establish the financial needs of the new household. You probably already have an idea of how much money you’ll need to pay each month to cover rent or mortgage payments and any HOA or insurance fees you may owe. These costs probably won’t change much regardless of the number of people living under your roof, but your monthly utility and grocery bills might. Do your best to estimate the total of your monthly expenses and compare these costs against the amount of money coming into the house each month so you can get an idea of how much your relatives might need to contribute.
When asking relatives to pitch-in to the new budget for your new living situation, you may want to determine the reasons why your relatives need assistance and how their current situation may reflect what they’ll be able to contribute. Can they support their personal financial needs? Or do they need additional help and care?
Elderly relatives may be financially sound and willing to contribute to household finances, but it may be difficult for them to help out in labor-intensive chores that keep the house running. In other cases, they may have a need for medical supplies, home-care devices, or related late-life care that makes it difficult to contribute to the household budget.
Adult children, on the other hand, may be physically fit but financially less stable as they find themselves facing large student loan payments or a disappointing job market. They may be able to contribute to the physical upkeep for the house but be unable—or unwilling—to contribute much money to the household budget.
Knowing the individual situations of your relatives will help you better determine how they can contribute to household finances
2. Set clear responsibilities
When tallying up your household expenses vs. your household income, you’ll want to be honest about who can contribute and be clear about the amounts to be paid. You might even consider coming to some sort of agreement to make this process easier.
For example, maybe your child is living with you to save money on rent and put it toward their loans. But they might be able to pay the grocery bill, or perhaps pay a smaller amount of rent If your adult child is still covered by your insurance plans, you might consider having them apply for their own coverage, if they’re able.
An older relative might be receiving a stipend of sorts for their housing, which may not have been enough for them to live alone but can contribute to your current shared housing bills.
Or, according to Goyer, if family members are unable to make monetary contributions to the household, you could have them takeover household tasks, like cleaning, yard work, or simple home repairs, in order to contribute to the overall wellbeing of the home.
According to Goyer, these agreements can be a verbal or written, and while they may feel like something you’d do with roommate rather than relatives, it can be helpful to talk through everyone’s expected contributions and responsibilities to avoid later conflict.
If you will be handling the budget by yourself, you might begin to feel overwhelmed or face difficulties in prioritizing the household’s bills. For example, where do your parent’s medication costs or your child’s next loan payment rank next to your mortgage payment? Goyer says it’s important to keep your own financial matters stable before offering help to others.
“You won’t be much help to other family members if your own financial security is threatened,” she says.
While it can feel overwhelming to take on these additional responsibilities, keep your loved ones in mind and be honest about your own needs. The more help you can get from the household, the better prepared you may be to ensure everyone’s financial needs are met.
3. Reimagine your budget
When you finally have an idea of the shape your new household will take, and an estimate of how much your relatives may be able to contribute, you can begin to reinvent your budget. A good first step, according to Goyer, is to make a distinction between the money you designate for communal expenses and the money that is solely your own use.
“You’ll need to create a shared budget, as well as your own personal budget,” she says.
Get a rough estimate of what your new household expenses will look like month to month with the added bodies, then compare that to the combined amount each family member will be contributing to the household. If you see that your combined contributions are still lacking, re-evaluate the expenses that each family member is able to tackle. Be honest with your family members about what you are able to provide, and don’t be afraid to take more than one crack at compiling a budget.
Money issues are still likely to come up with more people sharing your home, but creating two budgets may help you maintain your own bills and sense of financial independence while still providing for the household at large.
What works best for you and your family will depend on your individual situation and what your relatives are capable of contributing, but the more you can whittle down your expenses, the easier it may be to make sure your bills get paid on time and your multigenerational household keeps running smoothly.
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