Situational poverty is a period of poverty caused by situational factors, in contrast with generational poverty, which is a form of entrenched poverty which can encompass multiple generations of a family. There are a number of reasons for situational poverty to emerge, but some of the most common are: divorce, death of a spouse, unexpected health expenses, and the loss of a job. These uncontrollable events can cause a spiral of events which leads to a period of situational poverty.

Understanding the difference between generational and situational poverty is crucial for people who work with the poor and for poverty advocates. People in different types of poverty tend to approach their poverty differently, and they may have very different values or priorities. By riding roughshod over the poor in a region, activists can sometimes do more harm than good, even when they think that they are trying to help.

Someone experiencing situational poverty is often of a higher level of education than people who experience entrenched poverty. He or she is also typically familiar with the complex hidden rules and social codes of the middle classes, and this knowledge can be helpful when that person attempts to cope with the situation. People in situational poverty are also more likely to have assistance to fall back on, in the form of family members and supportive people in the community, and this can make a huge difference.

Situational poverty can be grueling, especially without a support network. For people who have worked hard all their lives, it can also be extremely depressing, as it may seem like everything is being taken away for no apparent reason. Many people who work with individuals in poverty point out that situational poverty is a sobering lesson, as it can potentially strike anyone; many people in the middle classes, for example, are only a catastrophic accident away from situational poverty.

Getting out of short-term poverty usually requires identifying and addressing the cause, and seeking out employment which will help to alleviate the situation. In many cultures, assistance for people in situational poverty is provided in the form of temporary government benefits, job placement assistance, food banks, and so forth, in the hopes of preventing people from falling through the cracks. If situational poverty is prolonged, it has a potential to become generational, which is something most advocates would like to avoid.