6 personal finance tips for today's economy

These uneasy economic times may have you wondering the best ways to spend, save, and grow your money. Check out this personal financial advice outlined in a recent newsletter from the veterinary CPAs and consultants at Lacher McDonald and Co.

1. Prepaying home mortgages. There are two thoughts on this topic. On one hand, not prepaying allows you to have more cash flow for other investments that might pay you bigger returns. On the other hand, prepaying reduces the interest you will need to pay in the future by thousands of dollars. The best advice: Pay off credit cards, increase your retirement contributions, and establish an emergency fund before you prepay your mortgage.

2. Giving loans to your children or grandchildren. Whether you loan money to family depends on whether you have cash available and what would happen if a loan wasn't ever repaid. If there is any risk, consider giving the money as a gift instead to avoid future family strife.

3. Saving money for your children’s college education. It's important to save for this large future expense, but if college is still a while away, at the moment you can set aside a little less to increase your current cash flow. As college looms closer, it's a good idea to switch to reserving cash if you’ve been using stocks or bonds.

4. Receiving Social Security early. Avoid this, if possible. Receiving funds from Social Security before you reach retirement age reduces the amount you receive in the future. In fact, if you put off receiving Social Security until after the normal retirement age, you'll receive an increased amount each month once you do retire.

5. Saving for retirement. Even though you may have reduced cash flow at the moment, it's important to keep funding your retirement. If you’re concerned about your returns on investment, consider more conservative options so your money is at less risk.

6. Establishing a trust. As your net worth increases, this becomes a more important consideration. It's best to periodically consult with an attorney who specializes in estates. But, for sure, make sure you have drawn up a will.