Over the past few years, increasing attention has been paid to differences between “rich” and “wealthy.” Arguably, the trend is positive for advisors and clients alike because there’s a growing sense among clients that they can be wealthy without being rich in the traditional sense.
While wealth has grown to encompass esoteric concepts, there’s no denying that there is a financial component to it and that’s never going to change. All of that is to say many folks are changing their financial perspectives and for the better at that. Rather than measuring their accomplishments in “rich” terms or accumulation of material possessions, they’re focusing more on financial freedom – forms of which can be attained without being rich in the strictest sense.
Indeed, it should be noted that financial freedom is one of those terms with some fluidity in its definition. It can be different things to different people. A young client may feel free to some extent by shedding the burden of student loan debt while a Gen Xer may feel similarly cheery by maxing out their 401(k) plan.
One of the commonalities is that nearly everyone feels some sense of freedom by getting to debt-free status and a new survey confirms as much.
Debt-Free Is in Fashion
KeyBank's annual Financial Mobility Survey, released Monday, highlights shifting attitudes, indicating many Americans are focusing more intently on shedding debt than they are on getting rich.
“The survey found that consumers are recalibrating their approach to money management to prioritize debt-free living over milestone chasing. In particular, approximately 3 in 4 (74%) Americans agree that debt-free living is an important milestone in their definition of financial success.,” according to the bank.
That’s not to say that if young people and ambitious types reading this should give up on becoming affluent. There’s nothing wrong with shooting for the stars, but there’s plenty wrong with resigning oneself to mediocrity. However, there’s significant merit in eradicating debt because outstanding liabilities, particularly “nuisance” fare such as credit card bills, stoke financial regret and stress.
“KeyBank also found that -- even as 68% of Americans feel financial stress, up from 50% in 2024 -- many are turning that pressure into purpose and building resilience for the long term. In fact, 1 in 3 (35%) Americans feel in control or proud of how they manage their money,” adds the bank.
Deal with Debt
Acknowledging that I’m not an advisor, I often mention in this space that advisors probably don’t find pursuits such as building budgets and credit counseling as glamorous as say estate planning or building portfolios.
Still, there’s clear demand for improved personal financial education, meaning some of the more basic items can be value-adds in client relationships. The momentum behind the debt-free movement confirms clients will be listen.
"The financial landscape for Americans is shifting in profound ways," said Daniel Brown, EVP & Director, Consumer Product Management at KeyBank, in a statement. "It's showing that the measure of success is not wealth alone, but also the ability to live debt free and prepare for what's ahead.”
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