Imagine you had the opportunity to stand in front of yourself fifteen years ago. Are there any financial mistakes you would warn yourself about or maybe an opportunity you’d like to share? Most of us think big on this question. We all wish we would have invested in one of the big tech companies during the initial public offering or maybe make a 35-1 odds bet on that underdog team who won the Super bowl. These grandiose moments sounds great in a time machine setting but in real life and my practice, I have realized most people’s financial mistakes are way more subtle.

Below are the top three mistakes I made before becoming the financially savvy woman I am today!

1. Buying clothes at Express in high school with my hard earned cash instead of saving and investing. Scroll down to The Cool Million you’ll see why.
2. Buying a very sensitive German car because it was “cool” (driving it was fun but the engine light was not).
3. Assuming scholarships would cover all my college costs and not planning for the alternative.

Below is a list of the five most common mistakes people make with their money.

1. Leaving money unemployed or staying in cash too long.

Money is the best employee you could ever have. It will work as hard as you want it to, never complain, while replicating itself in the process. All you have to do is give it a job, but that’s where many people fail. Money likes to be invested, whether it is in the stock market, real estate market or active in a business. Staying in cash too long is not healthy. The money in your emergency fund and a savings account should be there so the rest of your money can get to work!

With the heightened volatility we have seen in the market as of late, many are propelled to worry. Thinking that if they invest they will be buying in at the “wrong time”. But a bigger mistake than the “wrong time” is . . .  never.

A great strategy to combat the risk of buying at the height of the market is to be disciplined about it. Use dollar cost averaging (DCA), which means investing a specific amount during a specific period of time on a regular basis. We know the market will fluctuate. It will have periods of over-performance and underperformance, and it’s the underperformance which will help you buy additional shares at a lower price point. It will lead you to the real goal you need to reach to have a successful retirement, which is to become “share rich.”

2. Not giving it enough time to grow.

Time is money’s best friend. Any top investment firm will tell you that the most important thing you can do with your money is to invest it early. It’s not the amount of money you invest, but the length of time you invest it for that makes the biggest difference. Ready for some perspective?

The Cool Million: What would it take it get it?

1. You can save $305.24 per month from age 22 to 65 if you get a 7% average return on your investments.
2. You can save $555.23 per month from age 30 to 65 if you get a 7% average return on your investments.
3. You can save $1,234.46 per month from age 40 to 65 if you get a 7% average return on your investments.

As you can see, you are better off saving a small amount early on. It’s true, you can make up for the time you missed, however, our expenses usually go up, not down, as we age. It also may be harder to save more later on, even though your income may have increased. Building the habit of investing will also allow you to increase your experience with the ups and downs of the market. It will help you deal with behavioral factors which atone for many investors’ underperformance over their investment life.

3. Disrespecting it or not valuing it enough.

Have you met him/her? That person who always has the latest car, is somehow always on a beach or visiting some exotic place? The truth is that not all of these people can afford this kind of extravagant lifestyle. Even though they may look like they value money. The truth behind the scene is usually they value it the least. We work hard for our money and the best way to create a healthy relationship with it is by attributing focused time to tend to it. If you want to develop a great money relationship you must show it respect. You must understand the value of the dollar and what it can do for you. Having a spending, saving, and investing strategy can be liberating. Giving every dollar a home is like watering a plant, placing it in the right light, and watching it blossom! You should treat your personal finances the same way you would treat your business income. For example, if you owned a company you would care about its bottom line and create a plan for costs, hiring and profits. Treat your money with the same respect and value as you would a thriving business.

4. Forgetting to use it as a motivational tool.

When I was studying for a test in college, I would look at the amount of money I would earn once I had a degree. I would split this amount and say “for each hour I spend studying I will make X amount during my career.”  I would calculate what the compounding effect would be if received an average return, for say, twenty years. One extra hour might be worth $500, or even $5,000. I would pay myself (granted in future dollars) and compare it to wasting that time watching videos online. Life is full of trade-offs, by using one resource, you are in turn giving up another one. I gave up time for money. In that aspect, it made sense. I use this same strategy to compare the opportunity costs in financial decisions as well. For example, when considering purchasing a larger home versus a smaller home I asked myself; how many additional hours will it take for me to pay a larger mortgage and is the extra space and money motivation enough to work more hours?

5. Mistaking that the home we live in is an investment.

When we think about the best financial advice we often think about the word diversification, or having various asset classes within a portfolio to minimize risk. As someone who began her career in real estate, I support real estate as an additional asset class in your portfolio. You’ve heard me write about the “American Dream” and how proud I was when I finally achieved it. However, there’s a difference between investing in real estate and buying a home. Buying a home means having a place to make memories and Sunday night dinner. If your interest is buying the home for the appreciation and yield potential, then a home may not be the place for it. When you use cash to pay a liability on your mortgage, it doesn’t increase your net worth because you are simply moving a figure from one side of the balance sheet to the other. In addition, your home will have expenses. There may be windows and roofs that need repair and appliances that break down unexpectedly. These costs will eat into your cash. Add taxes and insurance on to these expenses and soon your nest egg will begin to dwindle.

Unless you live in a place where real estate prices have increased exponentially, it may take years to make money on your home. It’s also important to keep in mind that when you do decide to sell you will likely have realtor fees which could cost up to 6% or 7% of the closing price, so you will need to have at least that much in appreciation before you make a dime.

The best way to ensure you are making smart investments is to develop a great relationship with your money. Make your money work for you, give it enough time to grow, respect it, use it as a motivation tool, and understand the assets which may help it grow. These are key factors in developing a smart money strategy!

Who do you have working with you to ensure that you and your family are receiving the best financial advice? Are you doing it all alone or do you have a partner? Having the right people on your team may help you achieve your goals faster and smarter. Take charge of your money and start dominating your life today!

To learn more about how you can try to avoid some of the most common financial pitfalls, download our free guide “4 Common Mistakes People Make With Their First Million.”