Financial Challenges: Coping With the Unexpected

Financial Challenges: Coping With the Unexpected


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Alicia R. Williams

  Updated April 01, 2021 AARP Research Published November 12, 2019 / Updated April 01, 2021


For too many Americans, a car repair, job loss, pay cut, or medical bill can disrupt household finances, harming the households’ balance sheet and overall well-being for months or even


years.


To better understand the financial and emotional impact of unexpected financial challenges, AARP conducted a national survey of adults ages 30 and older. Researchers asked them about the


emotions they experienced as they dealt with their unexpected challenge, the strategies they used to cope with the challenge and the emotional fallout, and the actions they took to resolve


their financial situation.

Key Findings


The incidence of unexpected financial challenges is significant and impacts many U.S. households.  

Just under half of adults ages 30 and older experienced an unexpected financial


challenge in the past year — and during that same time period the majority experienced more than one challenge.Unexpected financial challenges can happen to anyone, regardless of their


income level, generation, gender, or race/ethnicity.However, some groups have a greater propensity to experience an unexpected financial challenge (e.g., Millennials, Gen Xers, women,


communities of color, and those with household incomes of less than $40,000). A medical expense, a necessary repair, and a loss of income are the most often reported types of unexpected


financial challenges.The median cost of an unexpected financial challenge ranges between $3,000 and $4,000. Higher median costs, however, are seen among those with household incomes of


$75,000 or more.


Recovering from an unexpected challenge can take months or even years.

Two in five who experienced an unexpected financial challenge in the past year recovered (or expect to recover) more


than six months from when the challenge first occurred.To help resolve their unexpected financial challenge, a majority made financial tradeoffs but fewer negotiated a lower bill.In


addition to cutting back on expenses and drawing down savings, three in five delayed paying some of their bills to help pay for their unexpected financial challenge, and half worked more


hours or took other actions to supplement their income. However, fewer than half asked for an affordable payment plan or reduction in the amount they owed.An unexpected financial challenge


often triggers a wide range of emotions — stress, anger, and sadness are the most common. One in five also reported experiencing depression, anxiety, frustration, and/or worry.Many cope with


an unexpected financial challenge by regulating their feelings and keeping the matter private; fewer seek social support.Problem-focused coping strategies used frequently by a majority of


those dealing with an unexpected financial challenge are making a plan of action and concentrating their efforts by taking one step at a time.Emotion-focused coping strategies used


frequently by about half of those dealing with an unexpected financial challenge are keeping their feelings to themselves, not letting their feelings get in the way, and keeping others from


knowing how bad things were.Only about two in five, however, talked with someone about how they were feeling, and fewer than three in ten asked someone they respected for advice or talked to


someone who could do something concrete about their situation. Methodology


The AARP survey was conducted by NORC at the University of Chicago on behalf of AARP. The data were collected using the AmeriSpeak Panel, a probability-based panel developed by NORC at the


University of Chicago. AmeriSpeak is designed to be representative of the U.S. household population.


Interviews for this survey were conducted September 4-19, 2019, in English and in Spanish with adults ages 30 and older, representing the 50 states and the District of Columbia. Respondents


were randomly selected from the AmeriSpeak Panel using area probability and address-based sampling. A total of 1,697 adults completed the survey.


For more information, please contact Alicia R. Williams at [email protected]. For media inquiries, please contact [email protected].


Suggested citation:


Williams, Alicia R. Coping with an Unexpected Financial Challenge: An AARP Survey of Adults 30+. Washington, DC: AARP Research, November 2019. https://doi.org/10.26419/res.00343.001


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