Millennials, those born between the early 80's and late 90's, have one big advantage when it comes to money — they have the most time on their side of any adult generation. But that also mean they have the most time to make big mistakes as well.

If you read the headlines, millennials​ are plagued with financial pitfalls: student loan debt, low paying jobs, low prospects to advance their careers and more. But simply avoiding the following mistakes can boost their bottom line.

Failing to Understand the Time Value of Money

The advantage that millennials have — time — is something older generations envy. Time is the biggest driver of wealth thanks to the truly grand power of compound interest. Millennials consistently forget about this fact and don't take advantage of it.

Millennials should be focused on saving every penny possible during their early years. $100 saved at 22 will be worth could be worth as much as $9,305 in 40 years. That's serious money that millennials are potentially passing up by not saving early on.

For older generations, they simply don't have 40 years to let their money grow. And with each passing decade, it becomes more difficult for wealth to grow at that rate. (For more, see: Money Habits of the Millennial Generation.)

Not Taking Advantage of "Free" Money

Another common pitfall that millennials are falling into is simply not taking advantage of free money opportunities. The most common opportunity is simply not taking advantage of their employer's 401(k) matching contribution. Most employers will match dollar-for-dollar up to a certain level, but millennials aren't taking advantage of that match. (For more, see: How to Make Maximum Money on Your 401(k).)

According to a recent report by Vanguard, about a third of 401(k) plan participants were not taking advantage of their full employer match. For millennials, that free money being left on the table could add up to tens of thousands of dollars in missed retirement savings. (For more, see: What Makes Millennial Savers Unique?)

Being Too Risk Averse

Millennials are also known for being too risk averse. They grew up seeing two financial crises — one that hurt their parents during the dot-com bust, and many graduated high school or college during the Great Recession. These two events are influencing millennials in a negative way — they fear equity investing.

However, stocks as a whole are one of the best asset classes for long term growth. And millennials need to focus on the long term — 30-40 years before they retire. They should be investing a larger portion of their portfolios in stocks to take advantage of this over time. It's because the long time line they can afford the extra risk that comes with the stock market. Failing to do this will cause many millennials to come up short when it comes to retiring. Even though it's a long way off, millennials need to realize this now.

Ignoring the Basic Money Equation

The next major gap that millennials are facing is ignoring the frugality equation. When it comes to money, a simple equation is fundamental: Income - Expenses = Savings. A lot of millennials (and every generation) focus on the "minimize expenses" part of the equation, but most overlook the income aspect of the equation.

Millennials have a unique advantage when it comes to potentially earning more money. They are usually healthier, more mobile, tech savvy, and understand the new Internet-economy. As such, millennials should be doing everything possible to maximize their incomes — moving for new jobs, taking on side jobs to earn extra cash and focusing on the big-money events in their lives like negotiating their salaries.

By boosting their income early on, millennials have the potential to save more over time and build wealth going into retirement.

Falling Into the "Millennial Trap"

But even given these pitfalls, millennials and young adults shouldn't fall into the "Millennial Trap." This trap is the fallacy that all millennials are doing poorly. On the contrary, most millennials are already addressing these issues and making great progress. Others are doing fantastic. Maybe not at the level of Mark Zuckerberg, but doing well nevertheless.

The real issue is that most media outlets favor reporting on the stories that tug at the heartstrings. Most of the millennial success stories aren't making the front covers of magazines.

The Bottom Line

For millennials, keep it simple — focus on earning more money, save the excess and never pass up free money from your employer. Cutting costs are great, focusing on mobility is key and possibly moonlighting to supplement a paycheck never hurts. Millennials have a lot of time and potential, so they should take advantage of it. (For more, see: The Importance of Millennial Consumers.)

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