Millennial Money: Put off debt payments to start saving now

It’s our new normal: Tens of millions of Americans are unemployed or on a reduced income. We’re social distancing and spending more time at home. But one thing hasn’t changed — debts still have due dates.

If you’re among those who are out of work or earning less because of the pandemic, paying off those debts in full is less important now that your cash is limited.

Instead, your best move is paying minimums or taking advantage of hardship programs so you can build up savings. Yes, now might seem like an odd time to focus on savings, but gathering any cash you can will give you more flexibility to respond to the next emergency.

Dig into cutting expenses wherever you’re able. And if you were laid off and expanded unemployment benefits are more than your old pay, see if you can save some of that additional income.

WHY HAVING CASH IS IMPORTANT RIGHT NOW

Already the impact of the pandemic has been vast and disorienting, and we don’t know what the economy or job market will look like in coming months.

But increasing the cash you have on hand can lend stability. Savings of as little as $250 to $749 can make families less likely to be evicted or miss a housing or utility payment after a drop in income or job loss, according to a 2016 report from the Urban Institute, a think tank based in Washington, D.C.

“Normally, you would want to pay off your credit cards,” says Dan Keady, chief financial planning specialist at TIAA, a financial services organization. “But on the other hand, you do have to maintain a cash reserve in the household, because it is a rather uncertain time.”

UPDATE YOUR MONEY PICTURE AND SET YOUR SAVINGS GOAL

Make sure you understand your current budget. Break down what you have coming in and your monthly expenses, including minimum debt...