Two million Brits fib about their finances!

Research has revealed that millions of us are in denial about the money mess we're in. Here's why it's crucial to be honest with your family - and yourself - about your finances.

I reckon there are few people who could honestly claim they've never bent the truth about the state of their bank balance.

Most of us tell the odd porky pie to our partners when we're questioned about treating ourselves - and after all, it doesn't always do for him (or her) indoors to know exactly how much has been spent on that new pair of shoes, or splashed out on lagers with the lads.

However, recent research from Sainsbury's Finance shows that an amazing 1.92 million people admit to hiding big or extravagant purchases from their other halves. That's deception on a pretty broad scale, and - depending on the cost of the items being bought - could have a huge impact on some couples' cash flow.

Even more worryingly, the study by Sainsbury's found that almost one in five people who owe money and are in a relationship are hiding the true extent of their debts from their partner or spouse.

This could have serious consequences for both members of a couple, and the members of any family they have together. When it comes to getting a mortgage, borrowing to fund home improvements or even simply making ends meet, debts that not everyone is aware of can cast a pretty dark shadow.

Lying to ourselves

Just as importantly, Sainsbury's Finance has revealed that even more people aren't being honest with themselves about money.

According to its study, 3.59 million people ignore or delay opening their bank statements, while 3.34 million ignore or delay opening envelopes that look like bills. Perhaps it's no wonder Sainsbury's also found that 8% of British adults regularly fail to pay bills on time!

Refusing to face the facts about your own finances and take control of your situation could cause it to spiral out of control, ultimately pushing you deeper into debt.

For example, making a late credit card repayment (or missing one entirely) is likely to cost you £12 each time it happens, while breaching your overdraft limit could leave you with charges totalling as much as £100.

Stop fibbing, start living

When it comes to money management, honesty is always the best policy - and it's vital to be truthful with yourself, as well as the people around you.

While the prospect of opening up to your partner or ploughing through piles of bank statements may seem scary, these are vital steps in the right direction.

Knowledge is power, and being honest with your loved ones about where you stand will allow them to support you in dealing with old debts.

Most importantly, ending your denial will allow to you experiment with smart money saving techniques that should help keep more cash in your pocket every month.

If you're ready to stop fibbing about your finances and make the most of your money, here are some tips that should help you get started.

1. Build a budget. A proper budget is the bedrock of good financial management. I believe that, without one, most people would struggle to stay on top of their spending and avoid drifting into debt.

Creating a realistic budget will require you to spend some time looking at your monthly incomings and outgoings. Next, you'll need to come up with a spending plan that will cover all your essentials and treats without leaving you out of pocket.

If you've never made a budget before, I'd strongly recommend reading the article 'The beginner's guide to budgeting'.

2. Deal with your debts. If you have old debts attracting expensive interest rates, it's vital to tackle these and ensure that all your outstanding borrowing is as cheap as possible.

If your credit rating is strong enough, applying for a 0% balance transfer deal or long term, low rate credit card could save you hundreds of pounds this year in interest payments (depending on how much you owe).

In the article 'The credit card that could save you £565', I explain the benefits of the Virgin Credit Card, which currently offers the market's leading 0% balance transfer deal.

If your current account is often overdrawn, you may be interested in reading 'Get rid of your overdraft for good!'.

Alternatively, if you think taking out a personal loan might be the best way for you to make existing debts cheaper, take a look at 'When a personal loan is the right way to borrow'.

Finally, if your debts are seriously worrying you, read '7 steps to fight your debts'. You should also consider getting independent advice from a charity such as Citizens Advice, National Debtline or the Consumer Credit Counselling Service.

3. Cut your costs. Last but not least, cutting the cost of life's essentials will leave you with more money left over for building up a pension fund, stocking your savings account - and, yes, spending on little luxuries!

I think these are financial ambitions we should all share.

Ensuring you're getting the best deal on everything from insurance cover to gas and electricity is crucial, as is learning how to shop around for the cheapest prices on consumer goods.

Victoria Bischoff's article '15 simple ways to save' is essential reading for anyone keen to shave significant sums off their biggest household bills.

**This material is for information purposes only and should not be considered financial advice. We strongly encourage our readers not to rely solely on this content, but to seek independent advice when making financial decisions.**