Billionaire Ray Dalio says people should budget for the basics — and the US faces 3 huge threats

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• Ray Dalio says identifying your basic needs and ensuring they're covered is key to a happy life.
• People can save money and ease their financial worries by focusing on the essentials, he said.
• Dalio told a podcast that the national debt, political infighting, and foreign rivals threaten the US.

Ray Dalio says figuring out your fundamental needs and setting aside enough cash to cover them is key to solving money troubles. He also sees a dangerous trio of threats to the US.

The founder of Bridgewater Associates, the world's largest hedge fund, spoke on "Tom Bilyeu's Impact Theory" in an episode released on Tuesday. Dalio is worth just over $16 billion, per the Bloomberg Billionaires Index.

He advised people to analyze their incomes, expenses, and savings, then conduct a stress test by calculating how many months or years they could afford an acceptable lifestyle if their income was cut or went to zero and they had to rely on savings.

The author, investor, and official mentor to Bridgewater's three co-chief investors said many people have lost touch with what's essential to life — such as a bed, food, and basic healthcare.

"I think we visualize too much the things that we're used to," Dalio said. Focusing on the basics instead can relieve stress and lead to a "happy life."

Dalio said he's "seeing a number of people who are going broke," and they could benefit from figuring out what they need in life and building their budgets around those things.

"It's the ambiguity, it's the worry, it's the stress," he said. "So if you do that from the beginning, and you have that played out in your head, then you know everything from there you can play with, and it's your icing on the cake. Once you've got safe, everything beyond that is luxury."

Debt, infighting, and geopolitics

Consumers have been hit hard by soaring prices for food, fuel, housing, and other basics in recent years. They've also seen the monthly payments on their credit cards, car loans, mortgages, and other debts soar. Higher inflation and interest rates have made the economy a key concern for voters ahead of the presidential election.

Dalio said on the podcast that people should first take care of themselves, then hope their leaders build an economy that will "increase the size of the pie as well as divide the pie well."

If those in charge won't cooperate with their political rivals, the result can be unproductive infighting that weakens the economy, he said. Failing to unite the country could result in revolution and subpar management, which Dalio deemed the "greatest risk" from a political standpoint.

He also rang the alarm on the potential financial and economic fallout from the US government's mushrooming debt pile, internal conflict fueled by a massive wealth gap, and mounting challenges to America's global dominance from China and Russia.

Dalio said US politicians are "at each other's throats" as the Republican and Democratic presidential candidates, Donald Trump and Kamala Harris, wait to learn who's been victorious.

"The dominoes are beginning to fall," he said about the stresses on regional banks, commercial real estate, venture capital, private equity, and the wider tech sector both in the US and overseas. The investor blamed those issues at least partly on excessive government spending and irresponsibly low interest rates.

"We're going to have financial problems and economic problems at the same time as we have this internal fighting and this, an external risky situation," Dalio added.