MONEY
11/01/2018 12:56 SAST | Updated 11/01/2018 12:56 SAST

If You Started 2018 On A Negative Bank Balance -- Here's What You Need To Do

Call it your 2018 money rehab.

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If you're starting the year on a zero or negative bank balance and relying on credit to get you through the month, there are a few steps you can take to make sure it never happens again.

John Manyike, head of financial education at Old Mutual, gave us these tips for a healthier financial life in February and 2018:

1. Learn from your mistakes

Where did you go wrong in 2017? You can't fix what you don't know or acknowledge.

You can do this by critically analysing your bank statements from the past year to monitor your spending habits.

You can also request a credit report. "You are entitled to one complimentary credit report a year, so it would be wise to make use of this service. Your credit report will provide you with a detailed run-down of your credit profile, which will enable you to effectively gauge your risk profile," says Manyike.

2. Be more realistic about your finances

Don't overcommit yourself financially -- this requires discipline.

"You need to set a realistic monthly budget for 2018. It would be wise to be always disciplined with your budget, while ensuring that you include a savings pocket for every month to handle any unforeseen expenses –– like car issues or unexpected medical expenses."

Budgeting properly will help you avoid a budget overrun.

READ: How To Get Through 'JanuWorry'

3. Is it a want or need?

Manyike says that a good way to differentiate between a "want" and a "need" purchase is to ask yourself whether or not the purchase can wait until next month. "If the answer is yes, don't buy it... you don't need it. However, if the answer is no and it is essential to your survival, then it is a 'need' purchase."

4. Evaluate your lifestyle

"When you have all your financial information in front of you, have a look at how many times a month you have dined out or entertained yourself and your friends. Try to cut back on any unnecessary lavish lifestyle purchases for a while. It is remarkable how eating out can take up much of your monthly budget," he says.

5. Pay off your debt

A report by Debt Source in 2016 showed that South African consumers owe the bulk of their monthly salaries –– as much as three quarters (75 percent) –– to creditors.

Manyike suggests starting by paying off your most expensive debt first –– for example, your credit card, or store cards with a high interest rate.

"With the current economic conditions, it is essential that South Africans become more realistic about their finances and effectively manage their debts," he says.