We all make mistakes with our finances. I’m not talking about making hard decisions and choosing which bills to pay and which to leave for another month. These are simple financial choices and the biggest money mistakes American workers are making with their paychecks.

The economy is still struggling, and far too many employees are turning away free money and lending other money from their hard-earned paychecks to the government free of charge.

Three Biggest Money Mistakes…

1. Not Capturing Their Employer Match

According to a recent study conducted by the Financial Industries Regulatory Authority (FINRA), almost 30% of American workers do not contribute enough to their 401k retirement plans in order to capture their employer’s matching contribution. Typically, many employers match dollar for dollar the first 3% or more of their employees’ paychecks in 401k retirement plan contributions.

So, for example, if you earn $50,000 per year before taxes, your employer will match the first $1,500 that you contribute to your retirement plan. So, at the end of the year, you will have $3,000 in your account without even factoring the change in share prices. That’s the equivalent to a 100% rate of return.

Where will you ever find a 100% rate of return even in a bull market? Why would you not contribute that $1,500 in order to earn another $1,500?

Because it is pretax dollars, we aren’t even talking about reducing your take-home pay by $1,500. It would reduce it by about $1,000 depending on your tax rate. I was blown away by reading that 30% of American workers are still leaving free money on the table at work.

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2. Not Minimizing Their Tax Bill

Do you invest in your company’s 401k over the match? Are you maximizing your Roth IRA? I am a big fan of Roth IRAs and the tax advantages they offer.

Unlike 401k retirement plans, Roth IRAs allow investors to withdrawal both principle and interest tax-free in retirement. Roth IRAs require investors to pay their taxes when they make the contributions, and 401k plan investments grow tax-deferred where you will have to pay when you withdrawal the money.

These are both great plans, but the real benefits come down to simply when you want to pay your taxes. Do you want to pay them now? Or, do you want to wait decades down the road and pay them later?

I know what my tax rate is now, and it is very low. For me, it makes more sense to try and maximize my Roth IRA contributions and then invest in a 401k. Of course, as we talked about before though, it always makes sense to contribute enough in a 401k plan first in order to capture any employer contributions.

3. Loaning Too Much Money to Uncle Sam

Do you get a huge income tax refund back at the end of every year? My wife likes to think of this as her yearend bonus. What it really is in all actuality is a tax-free loan that we are giving to Uncle Sam. This is another one of the biggest money mistakes that American workers make.

Every month you have taxes taken out of your paycheck based on your estimates of how much taxes you will have to pay at the end of the year. When you file your income tax return in the spring, you are actually simply just settling up with the government. If you estimated wrong and get a refund, you paid too high a percentage of your pay every month in taxes.

You could adjust your withholdings and take more money home each month. Like time value money calculations, an amount of money is worth more in the present than it is in the future. Your goal should be to have an income tax refund of almost zero.

That is the most efficient use of your money, and it does not give the government what essentially is an interest-free loan of your hard-earned paycheck each and every month. When you receive a refund at the end of the year, you are getting your own money back with no interest.

These were the three biggest money mistakes that workers make. Did I miss any? Have you made any of the biggest money mistakes with your finances and your job? Do you like large income tax refunds at the end of the year like my wife? I’d love to hear your thoughts in the comments.