More and more Canadians are moving in together to create multigeneration households. While it used to be a rarity in Canada, this type of living arrangement is growing faster than any other style; however, it’s most common for immigrant homes. There are many reasons behind this growth, including the cost and availability of housing, childcare assistance, and cultural traditions. Because multigenerational living is on the rise, it’s important for families to plan for the financial impacts of this arrangement—not to mention possible strains on relationships. Consider these tips if you’re thinking of sharing your household with a few more loved ones.
Give yourself an adjustment period
Multigenerational living can be a challenge, especially when the family is also adjusting to living in a new country. It’s important to be patient and take the time to consider each others' perspective. Any new living situation needs some grace for everyone to adjust and become comfortable. Ensure regular communication, especially with a spouse, to check on any concerns.
Communicate details ASAP
It’s important to speak with all adult family members and gain an agreement for specific responsibilities such as cooking, splitting the cost for internet, and even babysitting. In some cases, grandparents can provide childcare to help working parents avoid the cost of daycare. This can be a huge help as parents in Canada pay nearly $7,800 per year for childcare arrangements or more, depending on the location. However, across the country, only one in five grandparents provide babysitting regularly without pay. Be sure your parents agree with any childcare plans in advance to avoid a costly mix up.
Understanding the Canadian tax system and financials
Sharing a home can be a big saving strategy for both immigrants in Canada and longtime residents; however, there are also credits and benefits available to assist different generations. It can be difficult for newcomers to understand the Canadian tax system. A financial advisor can help find and maximize applicable credits, but the government also recently introduced the Multigenerational Home Renovation Tax Credit so you can cover some of the construction costs needed to comfortably house older family members. Making a few changes to a home can help everyone have their own space when needed.
Consider the extra costs
The largest areas of spending for Canadians are housing, food, and transportation, with accommodation accounting for almost one-third of all expenses. With more family members in a home, these totals are likely to rise. It’s best to make a budget for regular costs and ask everyone to stick to it as much as possible. Older residents should also factor a rising cost of living into their retirement planning.
Unexpected scenarios, such as the pandemic, are difficult to predict but, where possible, it’s recommended that you save a few months of expenses, especially if only a few members of the home are working. While most were affected by COVID-19, the finances of immigrant families were hit much harder than others. Consider making small automatic deductions from your paycheque toward an emergency savings account. Aside from finances, find backups for childcare or elder care. Creating a network and offering care in return is a great way for everyone to get quick help in case of an emergency.
Expectations, norms, and communication can vary greatly among generations, even those from the same culture. Family members can accidentally offend or pry without realizing it. Try to establish firm but fair boundaries early on and express mutual respect with all interactions. Sharing hobbies such as a family movie night or neighbourhood walks can help set aside time for a fun activity so everyone feels valued.
Maximize your savings
Living together with multiple family members has long been a saving strategy for immigrants in Canada—but it’s not the only thing you can do. The starting pay for new immigrants is almost 18% lower than the overall population. Generally, this rises after the first year with more Canadian work experience; however, it’s important to consider multiple ways to save money. You can contribute to your Registered Retirement Savings Plan (RRSP) or your spouse’s account. Although it can be difficult to find extra cash, the money lowers your taxable income and can increase your return. Just be sure to check your RRSP contribution limits.
Making multigenerational living successful
For a growing number of families, living together as a larger group of parents, children, and grandparents is becoming more popular. Because of rising costs, some make the move to help save money on childcare or housing. However, living in a multigenerational household can have a financial impact as well as an effect on relationships. A bit of planning, communication, and consideration can go a long way in keeping your family happy, as well as your wallet.
The content of this document is for general information only and is believed to be accurate and reliable as of the posting date, but may be subject to change. It is not intended to provide investment, tax, plan design, or legal advice (unless otherwise indicated). Please consult your own independent advisor as to any investment, tax, or legal statements made.