Dave Ramsey's 8 Rules for Protecting Your Money When the Economy Gets Unpredictable

If you're like most Americans, you might not be feeling great about the economy. Last October, a Pew Research Center poll revealed that 74% of Americans see the economy as being "fair or poor" — and that was before gas prices hit record highs this year.

But there's a silver lining: Since so many people are worrying about how to withstand economic downturns, there's no shortage of solid, actionable advice that can help you feel more secure in your financial standing.

In this article, we'll cover tried-and-true advice from Dave Ramsey, one of America's most popular financial gurus. Keep reading for Ramsey's data-driven facts about how to protect your budget when you're not sure what the economic future holds.

Pause all non-essential spending immediately

It's a good idea to hold onto your cash at the best of times, but when inflation is rising, it's a necessity. Starting small can make the transition to saving over spending easier. 

A blog on Ramsey Solutions recommends cutting your cable and TV streaming services and planning for meals at the start of the week so you don't accidentally end up eating out because you don't have a plan for dinnertime.

Keep (or build) a fully funded three- to six-month emergency fund

What should you do with the money you're saving from cutting non-essential purchases? Start by stashing it in your emergency fund until you've saved enough money that you can cover between three and six months' worth of expenses without having to resort to a loan.

As Ramsey Solutions says, "If a recession is an economic flood, an emergency fund is your life raft," which means having one right now is essential. That said, if you don't have an emergency fund yet, don't worry. Yesterday might have been the best time to start saving, but today is the second-best time.

Don't panic-sell investments

Selling your stocks at a loss might feel like a smart, safe move when you're worried about a market crash. But the only surefire way to lose all your money on the stock market is to withdraw completely. You'll have cut yourself off from future opportunities to recoup your losses when the market starts to grow again.

As Ramsey's blog says, "Investing is a long game. So leave your money alone! Keep your investments where they are and wait for the upswing to happen. Because it will happen."

Attack any remaining debt using the debt snowball

Paying off even a small portion of your debt can be a massive mood booster, especially during times of economic distress. Ramsey frequently recommends the snowball method as the best (or at least fastest) way to pay down debt.

With the snowball method, you make minimum payments on all of your debts except the smallest, which you pay off faster than the others by channeling any extra cash into a bigger payment. From there, you roll the payment you would have made on the smaller debt into a bigger payment for your next-smallest debt.

Build a written zero-based budget right now

A zero-based (or zero-sum) budget is a budget where you assign every single dollar a job. You decide ahead of time what you're going to do with each dollar, including how much you're going to save and how much you're going to spend.

By the time you're done crunching the numbers, you should be left with exactly $0. This doesn't mean there's nothing in your account, just that you know exactly where every dollar will end up by the end of the month, whether that's your savings account or your phone bill.

Avoid taking on new debt of any kind

A downturning economy is the exact wrong time to acquire new debt. And while inflation makes spending within your means even harder than it already is, it's important to remember that staying away from additional debt will benefit both your wallet and your peace of mind.

According to Ramsey Solutions, "[Debt] is a wrecking ball, both to your money and your mental health." Sure, a new credit card can loosen your anxiety in the short-term, but the long-term toll it can take on your anxiety levels during an already stressful time simply isn't worth it.

Find a secondary income stream

Layoffs have been in the news lately, especially in the tech industry, so picking up a side gig can bring you some much-needed peace of mind. But even if you aren't worried about losing your job, having a second job can help you feel more confident that your budget will outlast these tricky economic times.

Plus, you can use the extra money to build up your emergency fund or speed up your debt snowball, which will relieve you of yet another layer of stress.

Avoid financial doom-scrolling on social media

Staying up on the news isn't a problem, but getting sucked into worst-case-scenario social media stories could be. Along with impacting your mood, the doom-and-gloom articles can impact your bottom line by scaring you into straying from your financial plan.

Instead of making rash decisions based on what you see on social media, it could help to remember that, as Ramsey reminds readers, "recessions are a natural part of the economy — and they're temporary. We've actually had 13 recessions since World War II, and the average length of each was about 10 months." We've gotten through economic troubles before, and we can get through them again — don't let social media convince you otherwise.

Bottom line

It might seem counterintuitive to think you could get ahead financially when the economic outlook feels so dire, but following Ramsey's tips can help you do more than just keep your head above water. With some hard work, willpower, and practice, you can make it through this with more money in your wallet than you started with.

And remember, just because the economy is bad now doesn't mean it will be forever. Keeping your eye on a more hopeful future can give you the boost you need to stick to your Ramsey-inspired financial goals.

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