Reacting to an AARP survey showing that half of adults age 30 and older experienced an unexpected financial challenge in the previous year, AARP launched AARP MoneyMap, a free online tool that helps consumers create an action plan to deal with such emergencies. 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.
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 percent 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 decided to work more hours to supplement their income. But only 37 percent 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 of financial security at 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.
Other findings of the 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 information, see the survey report, “Coping With an Unexpected Financial Challenge,” at https://bit.ly/2ZwCGOS.
Anyone can access AARP MoneyMap at www.aarp.org/MoneyMap. The tool is free, and an AARP membership is not required.
This article was adapted from information provided by AARP.