With a bear market and an economy teetering on recession, any money missteps you make now tend to be amplified.

To avoid the mistakes that could hurt you long after the financial markets and economy have recovered, ­Bottom Line Personal asked five of our top money mavens to confess their worst financial blunders and to explain the hard but valuable lessons they learned from them…

Mistake: I acted like a hare, instead of a tortoise when saving for my son’s college education. When my son was born, I opened a 529 college savings plan in my home state of Iowa. My intention was to invest $100 every month in the diversified portfolio of stocks and bonds that my 529 offered. But $100 felt so insubstantial that I worried I’d never amass much. So, instead, I deposited $1,000 that first month and resolved to aggressively make large deposits whenever I had extra money or came into a windfall. Problem: Despite my best intentions, my 529 contributions over the years turned out to be very spotty. By the time my son entered college, the total balance in the 529 had grown to about $23,500. Had I stuck with my original plan, those monthly $100 deposits over the course of 18 years would have appreciated to $47,374.

Lesson learned: Steady, consistent contributions are best for long-term savings goals. If I had automatically put a small amount of money each month into the 529, I wouldn’t have missed it at all. I would have adjusted my lifestyle to accommodate it. Making occasional large contributions was a psychological struggle because it felt like a real hardship, and there always seemed to be a more urgent near-term need for the money than saving for college.

Mistake: I splurged on a vacation home. Back in 2007, I had just finished getting my Master of Business Administration (MBA) and had been promoted to vice president at an investment bank. My future looked so bright and the economy was so strong that I bought a two-bedroom condo at a resort on Lake Tahoe in California for $715,000. Problem: When the Great Recession hit the following year, my Lake Tahoe condo lost half its value, and my own paycheck was slashed by 65%. Even today, after all these years, my Tahoe condo still  is worth only $600,000.

Lesson learned: Spend no more than 10% of your net worth on a second home. Real estate can be lucrative and profitable, but it is far more volatile than many people realize. My rule forces you to build your net worth to a point where your margin of error is so substantial that even a poor or mediocre real estate decision won’t ruin you. Think about it—if a property costs 10% of your net worth, that means even if it lost 100% of its value, you would still have 90% of your net worth intact. When I bought my vacation property, the purchase price was equal to roughly 25% of my net worth. Another Dogen self-defense rule: Never spend more than one-tenth of your gross annual income on the purchase price of a car.

Mistake: My family blew a $1.4 million windfall in just four years. My mom, a single parent, had to work 60 hours a week to support me and my three siblings. When I was a teenager in northern California, a relative died and my mother inherited $1.4 million. We figured we were set for life!

Mom used part of the inheritance to buy a large house, and she allowed a financial advisor to
put the rest of the money in tax-deferred accounts. Problem: She ran short of income and had to pull out money from the tax-deferred accounts just to pay our bills and then got hit with steep penalties. By the time I applied to college, my family had only $6,000 left in the bank. I was so determined to never again be in a position of squandering money that I decided to become a financial planner.

Lesson learned: Just because you come into $1 million doesn’t mean that you can live like a millionaire. That’s why you hear so many stories of lottery winners going broke. Reality: If you want a safe annual return on $1 million now, you can get about a 4% yield in US Treasuries, or about $40,000 a year. That definitely can make your life easier and more enjoyable—but it’s not likely to solve your financial problems or fulfill your dreams. If you get a windfall…

Slow down. Don’t make any impulsive decisions for several months as you figure out how the money fits into your overall financial picture, including your career, existing debt, estate planning and investment management.

Factor in the taxes you will owe, and determine how to minimize them. When you receive a very large amount of money, recognize that you have entered into a long-term partnership with the IRS.

Mistake: I trusted my contractor neighbor to put an addition on our house. My instincts told me it was a bad idea, but I wanted to get the project going and I rationalized that my concerns were foolish. After all, there were no complaints about this contractor with the Better Business Bureau (I checked), plus hiring a guy who lived next to me meant that there was a good chance he would show up in the morning to work, right? Problem: I paid the contractor a large portion of his fee for time and materials up front—that amounted to approximately $60,000. He started framing the addition to the house, then disappeared. When I sought to put a lien on his house to get back some of my money, I found out he already had three mortgages on his property that were severely past due. Even worse: For months, his clients in the area, with half-finished home renovations of their own, would knock on my door looking for him. He had ripped them off, too.

Lesson learned: Pay attention to your gut instincts when you make ­personal finance decisions. Most conventional financial advice cautions people not to be influenced by their emotions because it can lead to irrational actions and choices. But if you feel uneasy about a financial move, it’s a sign that you probably need to do more research, planning and thinking. In my own case, I should have assuaged my misgivings by interviewing more contractors and talking to my husband about my concerns. While I insisted on a contract, I should have created a more detailed contract, delaying payments until most of the project was completed.

Mistake: I skipped a friend’s destination wedding because it wasn’t the financially responsible thing to do. When I was in my late 20s, a college friend invited me to her wedding on the island of Curaçao in the Caribbean. I turned down the invitation because it would have cost several thousand dollars—a real budget buster for me at the time. As a young journalist who wrote about money, I was rigid about sticking to all my financial targets, funding my 401(k), building my emergency fund and never carrying a credit card balance. Problem: I have regretted not going to that wedding for the last 25 years.

Lesson learned: Saving, managing and investing your money is about more than just growing your bank and brokerage accounts. It’s so you can afford to do what’s meaningful and important to you. As a rule, you should be wary of spending lavishly on rapidly depreciating assets such as automobiles and electronics. But when it comes to memorable experiences, consider being more creative with your personal finances. Looking back, there were ways I could have afforded that trip without compromising my long-term financial goals. For example, I could have chopped one day off the trip…found a less expensive flight at a less ideal time…and tapped my home-equity line of credit, then used my fiscal discipline to make sure the loan was paid back as quickly as possible.

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