Is a Multigenerational Home Right for You? Tips to Decide

Multigenerational (multi-gen) homes are gaining popularity thanks to rising housing costs, caregiving needs, and a desire for stronger family bonds. According to the U.S. Census Bureau, a multigenerational home is defined as a residence where three or more generations live under one roof. March 2022 data from the Pew Research Center show that multigenerational households in the U.S. have more than doubled over the past five decades. Generations United estimates that over 66.7 million adults (18+) (1 in 4 Americans) live in such circumstances. Some common types include “grandfamilies,” defined as “households headed by an older individual or couple who live with grandchildren under age 18,” and “two-adult generations,” which may consist of both “parent(s) and child(ren) under the ages of 18 to 22…[and] parents moving in with adult children.”

Multi-gen homes have several financial and emotional benefits. However, they also come with challenges, such as a lack of privacy. “To decide if a multigenerational home is a good financial fit, start with an open conversation about splitting expenses like rent, utilities, and groceries, plus who handles chores, childcare, and elder care. Set clear expectations for space, privacy, and long-term plans, like what happens if someone moves out,” says Brandon G. Norwood, Owner and Lead Planner at Oak City Financial.

5 Considerations of Multigenerational Living

Experts share other important considerations to decide if a multigenerational home is right for your family.

1. Finances

Living in a multigenerational home can be great for saving money and mutual support. Still, it takes planning to make it work. “When you’re living with family members from different generations, it’s important to figure out how to share household costs like rent, utilities, groceries, and insurance. Since everyone’s financial situation may be different, it’s best to agree on a fair way to split these costs. You can divide them equally or based on what each person can afford. Having a clear plan helps avoid any confusion or stress about money,” says Roger Boschulte, Head of Home Lending Products at Bank of America.

Consider setting up a shared bank account for household expenses. These kinds of financial organizational tools can normalize shared responsibility. Encourage everyone in the household to have individual savings and emergency funds, too.

“For families with older members, thinking about long-term financial needs, like healthcare costs, is really important. As family members age, there may be extra medical bills or caregiving needs. It’s also a good idea to have a conversation about retirement savings to make sure everyone is set for the future. Planning ahead for things like healthcare or estate planning can make things easier later on,” advises Boschulte.

Living in a multigenerational household could spell tax breaks or deductions for caregiving or number of dependents. It’s worth checking if there are any tax benefits your family can use, like claiming “head of household” status. A financial advisor or tax professional can help determine how these benefits might apply.

2. Communication

“The foundation of a successful multigenerational home starts with clear communication about personal boundaries and shared spaces. Each family member needs a direct role in establishing house rules and expectations, which can start from noise levels to dividing schedules. Financial discussions must also happen upfront, and conversations about bill-sharing and budget management should happen comfortably. Creating a framework for how decisions are made could also help prevent future conflicts. For example, have a regular family meeting or commit to a shared digital family calendar,” says Joseph Cavins, Licensed Marriage and Family Therapist (LMFT).

Assess how your family handles conflict and communicates through challenges as these patterns will intensify in shared living spaces. Norwood suggests having regular scheduled check-ins to help keep things running smoothly and using a simple budget worksheet to make financial decisions easier—and less emotionally charged.

“Take time to evaluate everyone’s daily routines and living habits and pay special attention to how different schedules might impact cohabitation. If certain family members already have friction even before living together, reconsider. It might also be helpful to do an extended trial period of cohabitation and go from there,” adds Cavins.

3. Burden Sharing

Besides financial contributions, families should also discuss other household chores and responsibilities. Caregiving expectations—eldercare and babysitting—need to be clarified and not imposed, for example.

Certified financial planner, Sherry Finkel Murphy, asks, “What help is needed by parents and children? Errands? Chauffeur duty? Companionship? After-school homework support?” She says families should be very clear on obligations concerning the division of labor in the home’s upkeep. If there’s constant fighting over dirty dishes or car keys, conflictual communication patterns may be to blame.

Call in a neutral outsider or therapist to help chart a way forward.

4. Home Layout

When scouting for a house or designing homes for multigenerational living, emphasize thoughtful space planning that balances togetherness and privacy. A well-designed living room creates an inviting gathering space. At the same time, separate wings or private suites offer peaceful retreats.

Consider incorporating flexible spaces that can adapt to changing needs, such as a library that converts to a guest suite and multiple bedrooms with en-suite bathrooms. And don’t overlook basic needs like ensuring adequate parking and storage for all. Remember to look for ground-floor bedrooms for those who can’t climb stairs.

5. Timing

Timing is vital in determining if a multigenerational home is a good fit. Consider how shared living aligns with each member’s current and future plans. For example, elderly parents may require increasing levels of care, while younger adults may be planning to move out within a few years. Thinking ahead will help ensure a smooth and beneficial transition for everyone involved. To reach a win-win scenario, it may help to have an agreed-upon back-up plan should some household members move out earlier than expected. “The goal is to create a living arrangement that works both financially and emotionally for the whole family,” adds Norwood.