When Families Live Together: The Finances

Can you absorb the costs of taking in your children and grandchildren?

By Bambi Holzer

You don’t anticipate having a full house again once your nest empties — at least not full-time. Tripping over toys and waking up to the joyful shrieks of children are charming when grandkids visit for a weekend, but dealing with them every day probably isn’t part of the retirement picture you envisioned.

Still, if you’re an empty-nester whose flock has suddenly flown home, you’re in good company. In a January 2009 Grandparents.com survey exploring the role of grandparents, 12.5 percent of grandparents who responded said they lived in the same home as their grandkids; more than half of them said the reason was that their adult kids and grandkids could no longer afford to live on their own. Given today’s rising unemployment rates and lack of available credit, those numbers are likely to grow. In that same survey, 65 percent of respondents said they believe the current economic downturn will result in an increased number of multigenerational households.

Certainly, that can be a blessing, offering financially-strapped couples some much-needed support while giving grandparents a great opportunity to bond with their grandkids. But it would be naive to ignore the potential for strain in the situation — especially when it comes to finances. If you're entering into a multigenerational living arrangement, it’s crucial to have a conversation with your returning offspring about your expectations.

Let Them Contribute

If your adult kids are moving in with you because of a financial crisis — say a job loss or a home foreclosure — your instinct, if you’re financially able, might be to pay for everything. The financially-strapped family will surely welcome that level of generosity, and it’s important to allow your adult kids to show their appreciation. So when they offer to pay for the occasional dinner out, or insist on contributing even a token amount to bills or rent, let them.

Who Pays for What?

On the other hand, if your adult children move in because of financial stress but are still working, establish upfront which expenses you expect them to cover. As grandparents, you may be used to spoiling grandkids in various ways, from helping to pay for school tuition to funding trips to the amusement park. But when they move into your home, and your grocery and utility bills balloon, the novelty can wear off quickly.

Let your kids know if you’re willing to cover all the additional expenses their long-term presence will incur, or if you expect them to chip in. Be specific: Explain that you’ll happily cover the bigger electricity bill, for example, but need them to contribute $100 a month toward groceries. Be frank about whether or not you’ll be able to pay for your grandkids' expenses, like summer camp, trips to the movies, or sports-league fees. Those things can add up — and so can your resentment if you find you're expected to open your wallet constantly. Also, discuss how much of your time will be available; let your kids know how much (if any) free childcare you’re prepared to provide, or if you expect them to find sitters for their evenings out.

Keep Your Financial Security in Mind

This is important. If your adult children are struggling financially, you may want to do everything you can to assist them. But in helping them, don’t jeopardize your retirement. If providing a free (or low-cost) place for them to live is the most you can offer, make sure that your kids know that before they move in, and that they're prepared to pay for their additional living expenses. Tell them you’re glad they’re coming home, but that you’re on a tight budget. Encourage a "let's all pitch in" mentality, and, if you're able, help out in ways that don’t pinch your pocketbook: For example, offer to shuttle the kids to and from school, watch them after school, or help with homework, while the parents work or seek new jobs. Time and peace of mind can have tremendous value for a family struggling financially.

For many families, and in many cultures, multigenerational living is, quite simply, a natural fact of life. In families where it’s an unusual arrangement dictated only by financial pressure, the dynamic can be more challenging. So for the sake of family harmony, talk to your kids about finances before they move in. Then go ahead and enjoy your full house.

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