29/01/2018 16:13 SAST | Updated 29/01/2018 16:50 SAST

WATCH: Don't Live A 'Wow' Life With A 'Lol' Budget!

"We all need to learn to live within our means."

domoskanonos via Getty Images

It is important that we all learn to live within our means, according to a financial expert.

"If you cannot afford it, it's better to stay away from it until you can afford it," said John Manyike, Old Mutual's head of financial education.

"Putting yourself in unnecessary debt to keep up with the Joneses is neither realistic nor financially wise," he told HuffPost.

His top three tips for living within your means:

1. Have a budget and stick to it

Manyike highlights the need for setting a realistic monthly budget for 2018. "Be disciplined with your budget and ensure that you include a monthly savings pocket to handle any unforeseen expense."

"It's remarkable how something that seems as simple as eating out regularly can eat away at your budget."

3. Be aggressive with eliminating debt
"You can start by paying off your most expensive debt first – for example, your credit card, or clothing accounts with a high interest rate. Keep in mind that it will be counterproductive to incur additional debt in 2018."

4. Don't be ashamed to "downgrade"

"If a car instalment is choking you, consider trading in your vehicle for a smaller, reliable one with a cheaper monthly repayment. This will also probably lower your insurance and petrol costs."

Similarly, he argues, if rent in a relatively expensive area has suddenly become a lot to handle, consider moving to an area that's safe, but with lower rent and a reasonably close commute.

"We like to say: 'Don't live a wow life with a lol budget.""

"With the current economic conditions, it is important that as South Africans, we become more realistic about our finances and manage our debts more effectively," he concludes.