A little white lie never hurt anyone, right? Wrong: it could have serious financial implications for your future. A growing number of people are getting into financial difficulty at a younger age and are then telling lies on applications forms to obtain credit, insurance and other products, according to CIFAS, the UK’s fraud prevention service.

The number of application fraud cases filed on the CIFAS database increased from 62,000 in 2004 to 77,000 in 2007, an increase of more than 24 percent. In each of these cases, people told “material falsehoods” on application forms or supplied false or altered documents to support them. The lies most frequently told included trying to conceal a poor credit history or exaggerating the length of time resident at a particular address in the belief that stability increases creditworthiness.

Verification checks often unearth such “little white lies”. But there are also more serious ramifications. At the very least, having your application refused could, in itself, work against your credit score. “Lenders look at the number of searches conducted by consumers as part of the credit assessment process and a number of searches in a short space of time would impact on a consumer’s score,” says Neil Munroe, external affairs director at credit reference agency Equifax. “But more significantly, if a lender felt the information provided could be deemed as fraud and decided to prosecute, this would show on an individual’s credit file and could seriously affect their ability to get credit in the future.”

People who have missed payments on previous credit agreements are advised to explain these to any new potential lender. A “notice of correction” service run by credit reference agencies give the facility to provide an explanation of circumstances that might adversely affect your ability to obtain credit on your credit file. There are other ways, too, to try and improve your rating:

* Make sure you are registered on the Electoral Roll — this is an essential way for lenders to verify an applicant’s identity and prevent ID fraud;

* Be aware of searches on your credit file when shopping around and how it can affect your credit rating;

* Close old credit card accounts — even if they show a zero balance lenders will look at the potential credit available when assessing applications;

* Aim to pay off more than the minimum each month otherwise it could take years to pay off debts and you will incur huge amounts of interest;

* Set up Direct Debit payments for loan repayments to avoid costly late payment charges.

And above all exercise honesty. In this case, it really is the best policy.

The Friday night take-away, Saturday shopping spree and summer get-away are in line for the chop, as consumers become increasingly nervous over looming recession. Almost nine out of 10 Britons say they will cut spending on non-essential items to cushion themselves against impending economic downturn, according to a poll of 1,000 people for Web site Fool.co.uk.

A British institution — the good old take-away — is set to receive the biggest blow, with over two-thirds of the nation planning to cut back on curries, fish suppers and late-night kebabs, the survey says. Other planned cutbacks include retail therapy (67 percent) and fewer holidays (49 percent), while 12 percent plan to stop smoking, 4 percent to put pension contributions on hold and 3 percent say they will even cut their kids’ pocket-money.

This is just the latest in a string of evidence pointing to dwindling consumer confidence and increased uneasiness over the state of the global economy. It is, of course, important not to talk ourselves into recession: unnecessary doom and gloom will only serve to exacerbate the situation, something that those with a vested interest in the property market remaining buoyant have long maintained.

But Britons are surely feeling the pinch. The latest figures from Philip Hammond, shadow Treasury chief secretary, reveal that the disposable income of the average working family has dropped to 25,900 pounds today from 26,200 pounds in 2006, and personal debt in the UK is growing at an unprecedented rate — one million pounds every five minutes.

With the cost of living rising while disposable income falls, consumers must feel like they are being squeezed from all sides: failure to make hay while the sun was shining could soon come back to haunt them. It is reassuring, then, that reality is finally hitting home. During a recession, cash is king. And those with the leanest budgets will be best placed to survive.

Money matters are climbing the list of the talks parents feel they must have with their children: the subjects of debt and saving for the future are now deemed to be more important than educating our offspring on sexually transmitted diseases (STDs), racism or religion, research by Engage Mutual Assurance shows.

Debt is the most common financial topic of parental education (64 percent) followed by saving for the future (62 percent). That ranks them fifth and sixth in the top 10 topics for parental “chats”, ahead of racism (58 percent), illness and death (53 percent) and STDs (52 percent). The only “facts of life” considered more important than these money matters in children’s at-home education are drugs and alcohol (78 percent), personal hygiene (74 percent), talking to strangers (73 percent) and the “birds and the bees” (71 percent).

The findings, from a poll of 2,000 people, are encouraging as financial education — for adults as well as children — climbs the political agenda. But they are a worrying reflection of the current environment. Britons’ debt mountain has tripled in the past decade and families are under increasing strain to make ends meet. A string of hikes in the cost of living — petrol, heating, food and transport — has compounded the problem.

Three-quarters of the population voice worry about the impact of the credit crunch on their purse-strings, according to research from BrightHouse Stores. Almost 60 percent are reining in spending on non-essentials, 43 percent are worried they won’t be able to put anything away into savings, others are spending less money on food and socialising, and 9 percent have even cancelled a holiday.

 Against that backdrop — and as recession looms – any advice on managing money should stand the generation of future adults in good stead. Perhaps, then, they will eschew that appetite for cheap credit exhibited by their parents before them.

Few people are more on the pensions money than Scottish Life’s Steve Bee. And he has some strong views in his latest “BeeHive” post following publication of our exclusive story on the soaring costs of setting up “personal accounts” — the government’s brainchild aimed at solving a looming pensions crisis.

Reality seems to be kicking in early on in the dream, says Bee, who finds the whole thing “really depressing”. A chink of light amid the gloom came in this week’s Budget, he says: the extension of the ability of pension fund managers to allow trivial commutation of small pension pots should make things easier and cheaper for occupational pension schemes. But, sadly, such rights are not to be extended to personal pension schemes, a move that only serves to “drive a horse and coaches through the whole idea of our having one simple set of pension rules for all types of pension scheme”.

Others point to the failings of other Budget measures. The formation of a “Savings Gateway”, again aimed at low and moderate earners, might seem like a nice little give-away. It will attract government matching on money saved into the scheme. But, viewed alongside personal accounts, it prompts serious questions, says Tom McPhail, head of pensions research at Hargreaves Lansdown — another leading commentator on the world of pensions. “If the government’s going to match savings pound for pound and your money isn’t locked in until retirement, then surely people will choose that over signing up to personal accounts,” he says. “And the generic advice model proposed by Uncle Otto will simply not be sophisticated enough to cope with these kinds of choices. It strikes me that in themselves these are all good ideas. But throw them together and it’s like cats in a bag.”

Perhaps, then, the answer is something far more simple. Rather than spending billions of pounds on building an “untried and clumsy” pension scheme, wouldn’t we all be better off if those billions could be channelled into directly boosting people’s pension entitlement, asks Bee. This vast sum of money could instead provide a decent basic state pension entitlement for everyone, providing a solid bedrock for private pension saving.

He is not the only one of that mindset. As another leading light, who wished to remain nameless, said to me this week: “If you’re going to spend 2 billion pounds, why not just set up an account and put a lump sum in there for that part of the population (low to middle income earners) that they can’t touch until they’re 65, rather than have all these intermediaries all taking a cut, all making a profit?” Hear, hear.

The dust has settled on Alistair Darling’s first Budget and consumers have been given little reason for celebration. The Chancellor, though announcing various measures designed to increase housing affordability, has done nothing to help the masses.

There were no moves to give a helping hand to hard-pressed householders, already struggling amid rocketing mortgage, food, fuel and tax costs, to ride out an impending recession. Darling did pledge to introduce a savings scheme targeted at low and moderate earners, often least able to save: the “saving gateway” will attract government matching for savings over the duration of people’s participation in the scheme. This has the potential to introduce up to eight million people into mainstream savings in the UK who otherwise might not make thrift a priority.

But the level of take-up of such a scheme, amid record personal debt levels and huge pressure on people’s purse-strings, is debatable. Other such government schemes to encourage the nation to save have hardly been a runaway success: think stakeholder pensions and child-trust funds (CTF). One fifth of parents currently let their CTF expire — the government can’t even give money away.

Individual savings accounts (ISAs), on the other hand, have flourished. They are one of the government’s true success stories. More than one in three adults hold an ISA and almost 215 billion pounds has been invested — making them far more popular than other savings initiatives.

Yet, the limits that savers can squirrel away into these tax-efficient vehicles have sorely failed to keep pace with inflation. The allowance will increase to 7,200 pounds from 7,000 pounds (3,600 pounds of which can be held in cash, up from 3,000 pounds) in the coming tax year — but that means the total threshold has risen by less than 3 percent since the accounts were introduced almost a decade ago. “Failing to increase ISA allowances further is a poke in the eye of savers who need encouragement to put away money,” says David Kuo, head of personal finance at Fool.co.uk.

Other changes to the ISA regime mean people will be able to switch cash holdings into stocks and shares — but the reverse will not be possible. And, once the switch has been made, there’s no turning back. The new rules raise the spectre of “another ghastly financial scandal”, according to Cliff Husband, research director at AWD Chase de Vere. “People could switch their ISA cash savings into investments unaware that they can’t switch back. This looks like another poorly delivered initiative from the government; it would be far fairer to all taxpayers if the switch between cash and investment within an ISA could be easily reversed.”

On pensions, too, there is little to encourage saving. While scrapping the 10 pence income tax rate and reducing the basic rate by 2 pence has done next to nothing to increase people’s take home pay, it has reduced the amount of tax relief they’ll get on their pension savings. The Chancellor has maintain higher level tax relief on gifts to charities, so why not for pensions?

“Frankly, while politicians have gold-plated final salary pensions, they can tinker with regulations which will have no real benefit for real workers,” says AWD’s marketing director Martyn Laverick. “If MPs did not have such generous pensions and they faced the same issues the majority of people in this country face about their pensions we would see more decisive action.”

So, it seems, consumers must face the headwinds and try to ride out the storm alone. From today, they should be tightening their belts.

By Francesca Lagerberg, head of the national tax office, Grant Thornton

Most Budgets have all the attraction of being slapped in the face with a wet kipper and sadly this one is unlikely to reverse the trend. As expected, from today up goes the cost of booze (4p on a pint) and fags (11p on a packet). Also for those who like driving larger less-green new cars there is a “showroom” tax coming in from 2009 that could cost them around 950 pounds.

However, for the entrepreneur there was a little cheer. After strong representations from business, Chancellor Alistair Darling has deferred the “income shifting” rules that were due to start from this April. These were a direct attack on family-owned businesses that include lower tax paying family members who take out dividends or profits but make a less significant contribution to the business. A case last year (Jones v Garnett) went against the government and it was looking to legislate to get the result it wanted. The proposals were wide-ranging and ill-targeted. A deferral will hopefully allow time to revisit this whole approach.

The working family got several name-checks in the Budget speech and this broadly amounts to an increase in child benefit (20 pounds per week for the first child) and the child element of child tax credit, but this will not take effect until April 2009.

There was no further change to the capital gains tax (CGT) regime so that from April 6 all individuals will be paying at a flat rate of 18 percent with the only hope of reducing the charge being a special entrepreneurs’ relief that has stringent qualifying conditions, but may help the smaller business to take their charge down to an effective rate of 10 percent. However, some others clearly benefit under the new regime. For example, those looking to sell a buy-to-let property after April will find that the new rules help them as the best tax rate they would get under the existing legislation would be 24 percent.

For non-domiciled individuals, the Chancellor provided further details on the radical changes taking effect from April 6. If they want to continue to get the tax advantages of being non-domiciled in the UK after then they will have to pay 30,000 pounds for the privilege once they are resident here for seven out of the past 10 years. However, for those who would not remotely be able to pay such a high levy remitting just small amounts of foreign income (2,000 pounds) will not be caught. This is a slight increase on the original 1,000 pound proposal. There is also a new test of where you were at midnight to work out what days you were really present in the UK, which may be more useful to internationally mobile workers than the rules we heard of last October at the pre-Budget report.

So, overall Darling’s first Budget was short on drama, but long on minor detail. A massive 207 pages of back-up notes support the Budget Red Book. For most people this event will provide little to cheer, but equally little to passionately dislike.

It’s “national no smoking day”, and stubbing out could help your wealth as well as your health. The 1.1 million Britons who quit a year ago have collectively saved more than 1 billion pounds by not feeding their nicotine habit, according to Yorkshire Bank. Meanwhile, the 13 million people who’ve carried on puffing since “no smoking day” last March have seen almost 12.5 billion pounds-worth of potential savings go up in smoke.

“It’s all too easy for long term smokers to forget just how expensive their habit actually is, but those smoking just 10 cigarettes a day could easily save almost 1,000 pounds during the course of a year,” says Gary Lumby, Yorkshire Bank’s head of retail. “By putting the money they’d normally spend on cigarettes in an ISA (individual savings account) or high interest savings account, smokers will soon see those savings adding up, particularly if there is more than one smoker in the household.”

And there are more savings to be made. Insurance companies consider ex-smokers to be ‘non-smokers’ a year after they have given up. And that could see your life and critical illness cover premiums fall by 50 percent. The monthly premium with Norwich Union for a 60-year-old male smoker wanting 100,000 pounds worth of life cover over 20 years is 181.30 pounds, while a non-smoker of the same age will pay just 84.30 pounds — 1,164 pounds per year less — according to figures from price comparison Web site Moneynet.co.uk.

In addition to the financial benefits, there’s a long list of other good reasons to kick the habit — having more energy and looking and feeling younger as the premature ageing effects of smoking are stopped in their tracks. Those who give up should also have lower stress levels, whiter teeth and an improved sense of taste and small, according to the “no smoking day” Web site.

But, as people addicted to the dreaded weed will no doubt testify, it’s a hard habit to break. And they can take some comfort in one little-known benefit to smoking. People with medical conditions and those who are likely to suffer poor health — such as smokers, the obese or those with a history of poor family health — generally achieve higher annuity rates. Their life expectancy might be shorter, but their pension pot will buy them a higher annual income in retirement.

A freeze on interest rates at 5.25 percent offers little respite for hard-pressed borrowers. Amid the difficult task of balancing a slowing housing market with rising inflation, stoked by increases in energy and food costs, the Bank of England has taken a wait-and-see approach.

While some think it right that the Monetary Policy Committee (MPC) holds off until a more settled picture emerges, others point to real dangers. Chris Iggo, a senior strategist at AXA Investment Management, says the Bank is “ignoring the clear and present danger of the credit crunch gaining ground”.

“We are again seeing a tightening in the credit markets and action today was much needed,” he says, urging the MPC to cut rates by a full half percentage point next month.

Mike Ratcliffe, chief executive of Wolsey Securities, an independent finance specialist for UK house-builders, points to an even more worrying upshot: that reluctance to act will increase the chances of the country taking itself into a recession. “(That) will be a tragedy and the government’s aspirations for three million homes by 2020 will be in tatters,” he says.

While that might not materialise, the rate freeze does little to bolster flagging consumer confidence. Nor does it ease the pressure on consumers increasingly feeling the pinch from the increased cost in servicing mortgage debt, a flat housing market and huge increases in the cost of living.

Conditions in the mainstream mortgage market are deteriorating at a frightening speed, with lenders changing their pricing and lending criteria at the fastest pace in living memory — in fact, probably ever, says Ray Boulger of mortgage broker John Charcol. That, for certain, will not be halted until the MPC takes action.

But with most analysts still pencilling in a cut for later this year, there is a chink of light at the end of the tunnel.

The countdown to the end of the tax year is on — and those who ignore their 7,000 pound ISA allowance do so at their peril. Early signs do not bode well for this year’s ISA season. Retail sales were notably weak in January, and although this month is usually a quiet one for subscriptions, the statistics paint a worrying picture: funds actually flowed out of the tax efficient accounts to the tune of 68 million pounds.

The data is, perhaps, not wholly surprisingly given the rollercoaster ride for stock markets that has shaken investor confidence. But withdrawing money from these tax-efficient savings vehicles — rather than switching the funds to lower risk asset classes, such as cash or more cautious investments — appears a very short-term reaction to an investment that should be viewed in the medium to long-term.

As Rebecca O’Keeffe, head of fund management at Interactive Investor, points out, had you missed the best 10 trading days on the UK stock market from 1990 to 2006, your average annual compound return almost halves — falling to 3.3 percent from 6 percent. Miss the worst 10 trading days and your annual return soars to 8.8 percent, but timing markets is impossible.

Investors should, therefore, adopt a time horizon of at least five years, and avoid knee-jerk reactions. Withdrawing money from your ISA is a final decision; you can’t put it back in and, therefore, you lose the long-term benefits. At a time when fiscal drag is pulling more and more people into higher tax brackets, council tax is rising and households’ purse-strings are coming under increasing pressure, any safe-haven from the ravages of tax should be welcomed with open arms.

It might cost something running into billions of pounds, but a proposed new financial advice service would pay dividends for consumers, industry and government alike. The “money guidance” service — the key recommendation of a year-long review of financial advice — would cost between 780 million pounds and 1.67 billion pounds to set up and run between 2009 and 2060, according to the Thoresen report.

That cost, said Otto Thoresen, chief executive of AEGON, should be split equally between the government and financial services sectors. But the outlay would bear significant fruit, with the benefits hugely outweighing costs. Insurers, fund managers, banks, building societies and the like would collectively benefit to the tune of between 3.61 billion and 5.51 billion pounds in the five decades to 2060, the report estimates, as a result of lower levels of bad debt, a greater willingness by consumers to engage with the industry and a reduction in advertising and selling costs. The state, meanwhile, would save something in the region of 4.65 billion to 6 billion pounds by 2060 through reductions in the payment of Pension Credit and other benefits.

And then there are consumers themselves. They could be more than 15 billion pounds better off due to greater access to financial guidance and increased financial awareness. Through better budgeting, debt management, shopping around and improved saving for retirement, the man and women on the street could give themselves a real financial boost. A ripple effect could also spell huge benefits for society as a whole. Fewer money worries could see improved productivity through reduced stress-related absenteeism and reductions in public expenditure attributable to the consequences of family breakdown.

Coming at a time when huge levels of personal debt, the credit crunch and increases in the cost of living - council tax, energy bills and food costs, for example - are placing greater pressure of household budgets, this triple-win situation - although some way off - sounds good in theory, and the report was broadly welcomed at an event at the Treasury on Monday at which the government pledged 12 million pounds to road-test the scheme. Everyone from consumer group Which?, debt charities and other industry bodies gave a cautious welcome of the scheme, to be run by the Financial Services Authority, although many were eager to see the full details of the report.

But, provided the pilot is successful and the service gets off the ground, the real challenge will be in encouraging consumers to use it. Research undertaken as part of Thoresen’s review found that three-quarters of people said they would use a money guidance service — a third of whom said they would be “very likely” to do so. In fact, eight out of 10 people who took part in pilot projects did at least one thing relating to their finances within a week of using the service, and more than half took a specific action such as buying a product or speaking to a regulated adviser.

But whether a widescale “pathfinder” produces equally as encouraging results remains to be seen. If take-up of the government’s child trust fund (CTF) give-away is anything to go by, the signs are not particularly heartening. Latest figures from HM Revenue & Customs show that a fifth of CTF vouchers expire because parents fail to invest them within the allowed 12 months. Then, the government steps in to place the voucher — a free 250 pounds per newborn. But even after that, 60 percent of accounts do not see any further activity. A failure to accept government hand-outs points to a hugely apathetic public and one that, perhaps, has little trust in a financial services sector that has been hit with one mis-selling scandal after another as it focuses on the hard sell and confuses consumers with its jargon.

If anything, then, let us hope that any new guidance service will be governed by the principles recommended by Thoresen: impartiality, supportiveness, crisis prevention, universality and, above all, freedom from any desire to flog products. Maybe then people might become more engaged with the importance of managing their finances and the service stands a real chance of sparking a national savings habit that would lead to a rosier financial future for the masses.