Make your bed, make your fortune

Jessica White.

During his 2014 commencement address, Admiral William McRaven told attendees at the University of Texas about the significance of making your bed each morning.

You can watch a summary of his speech here.

According to McRaven the simple, mundane task of making your bed to perfection each morning is significant as it ensures that you accomplish the first task for the day. The small sense of accomplishment this gives you will stand you in good stead to accomplish the other tasks that lie ahead of you. It also reinforces the fact that little things matter; and that little things add up to big things. If you happen to have had a bad day, when you climb into your well-made bed you will feel encouraged that you can do things right. And you will do so tomorrow.

The wisdom of this simple act has been proven to battle-hardened marines. And it applies to investors, too. For it is in the seemingly insignificant and mundane details, in the daily discipline of healthy habits, that the seeds for success are sown.

It is the persistent, consistent investor who stays the course whatever the current economic climate that reaps the greatest reward. A much-cited Fidelity internal audit reveals their most successful investors over a ten year period were those who had died or otherwise forgotten about their accounts. In the world of long-term investing, there is much to be said for consistently saving, investing and simply waiting.

Millennial money: go to the mattresses

Millennials can learn a lot from this disciplined approach. Moody's Analytics reported in 2014 that Americans 35 and under had a negative savings rate of 2% that year. This low-to-no savings trend amongst millennials is replicated year-on-year across the globe. The reasons are well-documented: millennials are the most highly educated generation (and therefore the most indebted and latest to enter the workforce) and they prioritise short-term experiences and consumption over long-term financial stability.

The good news for this tech-savvy generation is that there are an increasing number of digital tools at their disposal to assist them with their money management. Apps to help you create and stick to a budget, digital tools to crunch data and analyse your spending habits; some even make recommendations as to where to cut back and how much to save.

The challenge for these companies remains engagement and a Mary Poppins approach is required. This approach involves turning a chore into something fun, or at the very least making a mundane task a bit easier to accomplish. For millennials in particular, too, an engaging user experience that turns long-term goals like investing for retirement and buying a house into seemingly simpler and more attainable tasks is key. The activity of saving and investing even small amounts of capital needs to highlight progress and trigger positive reinforcement in order to ensure the sustainability of the savings and investment discipline.

While digital tools can’t and therefore shouldn’t replace professional financial advice, they do assist tech-savvy, independent-minded millennials to make the kind of informed financial decisions they would otherwise not want to ask industry professional about. (A recent survey reveals that 71% of millennials would rather engage with their dentists than their bank.)

While uptake on such digital tools has been slow, the potential for growth is enormous. Many of these digital tools are in their infancy and still need to earn their stripes before uptake up ticks. In addition, as more and more millennials come of age, enter the work force, start buying cars and houses and having kids, the awareness for the need for better fiscal discipline and professional financial advice will grow.

To quote The Godfather, it’s time that millennials “go to the mattresses”. A soldier’s discipline is what is required to win the struggle for financial freedom.