Dealing with Unforeseen Financial Surprises

Reacting to new research that shows one-half of adults have experienced an unexpected financial challenge in the past year, AARP launched AARP MoneyMap™, a free online tool that helps consumers deal with unanticipated financial emergencies.

AARP MoneyMap helps users create an action plan to deal with surprise financial challenges such as a medical expense or a car or home repair. The tool provides steps that consumers can take to proactively address an economic hardship, while avoiding the heat-of-the-moment decisions that can leave them worse off financially.

According to a new survey from AARP, substantial numbers of adults age 30 and older — across all ages, income levels and other demographics – have encountered a significant unexpected financial challenge during the past year. A medical expense, a necessary repair or a loss of income are the most common types of unplanned financial setback. The median cost of financial challenges is between $3,000 and $4,000, and 44 % of those surveyed said recovery took or will take more than six months.

Those affected reported that they felt stressed and overwhelmed, which perhaps resulted in decisions that could make their financial situation worse. Sixty percent reported that they used credit cards or delayed payment of household bills to help pay for an unexpected financial challenge; half of those surveyed decided to work more hours to supplement their income. But only 37 % thought to ask the creditor for a revised payment plan or a reduction in their bill.

“An unexpected financial challenge can wreak havoc on a family’s finances. And many people don’t know where to turn,” said Gary Koenig, vice president, financial security, with the AARP Public Policy Institute. “Under stress, many people choose the quickest solution, even though better options might be out there.”

Consumers who access AARP MoneyMap answer simple nonintrusive questions about their financial setback, and then receive steps they can take to address the situation, including: what factors to consider before paying a bill, local resources that may be able to assist them and information about ways to pay off the expense. An individual’s action plan can be saved and accessed later, if users sign up for a free AARP.org account; registration requires limited personal information, and the data will not be shared, sold or used for any other purpose.

Other findings of the AARP’s survey include:

  • Unexpected financial challenges can happen to anyone, regardless of their income level, generation, gender or race/ethnicity.
  • Significant financial setbacks trigger a range of emotions, including stress, anger and sadness.
  • About half of respondents coped by suppressing their feelings, and keeping the matter private. Fewer sought social support from others.

For more, see the survey report, “Coping With an Unexpected Financial Challenge.”

Anyone may access AARP MoneyMap at www.aarp.org/MoneyMap. The tool is free, and an AARP membership is not required. By providing accurate, unbiased information on a comprehensive set of options, the purpose of AARP MoneyMap is to help individuals and families navigate a financial emergency without damaging their long-term goals.