In 2018, the Pew Research Center found that more than 1 in 10 American parents were “multigenerational caregivers” because they provide unpaid care for a child (or children) under 18 years old and an adult, such as a relative, friend, or neighbor. Often, this extended family lives together under the same roof, which presents unique financial challenges.
Stretching limited income streams to take care of children and dependent adults can seem daunting. However, consistent, honest communication and realistic budgeting can help make the day-to-day stresses of a large household more manageable.
Firstly, the more people there are in your household, the more different money goals and needs you’ll likely need to consider. Because of this, it’s important to practice good communication habits to get everyone on the same page and, hopefully, on track to meet as many unique needs as possible.
One major takeaway from your conversations should be a budget that works for everyone. Here are the first steps you’ll need to take together.
In terms of choosing a budgeting method, there are several different options. For example, your family may choose to follow the 50/30/20 budgeting method; 50% of your income going towards needs, 30% going towards wants, and 20% going towards savings. If 50% of your total household income is not enough to cover all your needs, then you can try the 80/20 budget, in which 80% goes towards necessities and 20% goes towards saving.
Money Management E-Newsletter: January 2021