Money expert Dave Ramsey’s best tip for budgeting in a tight economy: ‘Slow down, use some wisdom here’

Ramsey Solutions founder Dave Ramsey encourages consumers to ‘slow down and back up a little bit’ in a ‘tight’ economy.

As economic data indicates that the American consumer is spending more but saving less, money expert Dave Ramsey shared his best advice for navigating a “patchy” and “tight” economy on “Cavuto: Coast to Coast” Thursday.

“Slow down a little bit, calm down. Use some wisdom here, and no, don’t run your credit card debt up, which is the highest right now it’s been in almost 20-something years,” Ramsey told host Neil Cavuto.

The Ramsey Solutions founder pointed out that consumer spending on the biggest shopping days of the year – Black Friday and Cyber Monday – jumped 11% year-over-year, and air travel levels are starting to approach pre-pandemic levels. However, Ramsey cited concerns that more Americans are also pulling savings from their 401(k)s amid increased spending and overall inflation.

“[Consumers] went out and kind of had a spending temper-fit for Christmas and are spending like crazy; then on the other hand, we’re tapping 401(k)s for hardship withdrawals,” Ramsey explained. “And so I think this is a thing where people need to slow down and back up a little bit and just say, ‘Gosh, it’s tight out there, the gas pump’s real. This grocery thing is real, the inflation is real.’”

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More than half of working U.S. adults feel as though they are behind on retirement savings, underscoring the hardships of the inflated economy, according to a recent report from Bankrate.

Personal finance expert and author Dave Ramsey says the gas pump and grocery inflation “is real” on “Cavuto: Coast to Coast” Thursday, December 8, 2022. (Getty Images)

Bankrate’s data showed that while 34% of workers are contributing the same amount to their retirement savings, only a quarter of workers have been able to increase their contributions compared to last year.

Meanwhile, 16% are contributing less than last year as inflation continues to squeeze worker budgets and outstrip pay gains. Additionally, 24% of workers didn’t contribute to retirement savings over the past two years, according to the report.

As Americans face difficulties contributing to their savings, Ramsey has advised consumers not to rely on credit cards to cushion inflation’s blow.

“We’ve seen decades since we’ve been in this bad position. And people are going to fix the inflationary problems, the pressures, with the wrong tool,” Ramsey previously told “Cavuto: Coast to Coast.” “And the credit card is the wrong tool. It’s going to cause them problems later. It comes home to roost. It’s really sad.”

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Ramsey also noted that Big Tech’s industry-wide, massive layoffs are “not a good sign” for the economy, signaling the likelihood of a recession.

“Those folks are not going to be out there buying airline tickets. They’re going to be at home because they got laid off,” Ramsey said.

The money expert expanded on today’s “patchy” economy, noting there are sectors experiencing “prosperous” growth, while others are “getting hammered” by inflation and rising interest rates.

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“And it’s not just a certain pocket demographically, but it just seems to be thinly sliced out there, kind of nuanced, if you will,” Ramsey said. “So you can’t just throw a blanket over all of it and say, ‘Oh, it’s all bad,’ or, ‘They’re all spending like crazy, so we’re not going to be in a problem.’”

And when it comes to Ramsey’s top inflation survival tips, the expert recommends budgeting for the next 10 years; maintaining your 401(k) contributions and retirement savings; curbing credit card borrowing; and stopping luxury purchases or frivolous spending.

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FOX Business’ Daniella Genovese and Ken Martin contributed to this report.