Dave Ramsey's 4 Best Tips for Managing Money in a Recession

This advice could help protect your finances.

Right now, the United States may be in a recession depending on who you ask and what measure you use.

One traditional measure of recession is two consecutive quarters of a negative gross domestic product. And economic data showed that the country has just experienced that. However, other measures of economic standing such as the national unemployment rate indicate that we may not be in a recession. And the National Bureau of Economic Research hasn't yet declared one, and that's the agency that provides the official word.

Whether there is an official recession or not, though, many people feel like there is one due to a number of troubling economic conditions, including the fact wage growth isn't keeping up with rapidly rising prices.

If you're one of the many who is worried about what's going on in the economy, finance expert Dave Ramsey's helpful tips for how to manage your money in a recession could help put your mind at ease. Here are four of those tips you may want to follow.

1. Keep going with your debt payoff plan -- except in certain circumstances

Ramsey is heavily focused on improving your finances by repaying credit cards and other debt, so it is probably not going to come as a surprise he "absolutely" believes you should continue working on paying down your loan balances ASAP even during an economic downturn.

"Use a recession as even more motivation for why you need to cut debt out of your life forever," Ramsey suggested on the Ramsey Solutions blog. "Think about the peace of mind you'd feel if you didn't have debt in the middle of a recession."

There's one caveat, though. You may need to pause your debt payoff plan if you're in what Ramsey calls "storm mode." That's a situation where your future is uncertain and hoarding cash becomes more important to deal with that reality -- even at the expense of becoming debt free. Two examples of a situation where you might be in "storm mode," according to Ramsey, include if you have a baby arriving soon or if you lost your job.

Outside of these circumstances, Ramsey doesn't believe pausing debt payoff is a smart idea during a downturn.

2. Always keep saving

Ramsey also doesn't believe you should put a pause on saving money during a recession. This includes continuing to save up an emergency fund with a minimum of three to six months of living expenses as this money could come in handy during an economic downturn. But he also thinks you should keep going with other routine savings as well. "If you've got a Christmas sinking fund in full force -- keep it," he suggested.

Ramsey believes seeing higher numbers on your savings accounts -- even those earmarked for specific purchases rather than for emergencies -- can give you more peace of mind. After all, that money will be there waiting if you need it.

3. Stick to your investing plans

Ramsey is very emphatic when it comes to what your investment strategy should be. He said "a thousand percent yes" you should keep investing because the economy always recovers after downturns even when caused by serious situations such as 9/11 or the Great Depression.

He doesn't believe you should take money out during the downturn because you could miss out on gains your investments could have made during the recovery and will lock in losses.

"Keep calm, stay level-headed, and don't jump off the investing roller coaster. Ride it out over time, and your future self will thank you. "

4. Look at the big picture

Finally, Ramsey suggests keeping in mind that a recession is just temporary and you should avoid making long-term decisions based on a short-term blip in the road. Instead, he says to always remember that things will get better so you shouldn't panic.

However, with that said, he urges using the recession as a wakeup call if you need it. "If this recession has gotten your attention and made you take a hard look at how you're handling (or not handling) money, now is the time to take matters into your own hands and do something about it."