WITH debts now averaging more than 130% of our incomes, and growing, British insurance company Prudential has issued a stark wake-up call for the under-30s: sort out your finances or face a lifetime in the red.

Research by Prudential reveals that people as young as 26 should already be well on the way to financial security. This means buying a house, starting a pension and saving for the future.

According to Prudential's financial advisers, the problem is that people won't save, not that they can't save.

"When did it go out of fashion to save?" they asked. "Before, if you couldn't afford something, you didn't buy it. Now, with credit cards and loans that are so much easier to get hold of, as well as sophisticated advertising techniques, we seem to have become much more of a consumer society.

"We need to get a grip on our finances. The earlier you start planning, the better. While it may not be possible for everyone to have started a pension, bought a house and started saving by the age of 26, it should certainly be on their radar."

But with first-time buyers paying an average of 257,000 to get on the property ladder, even the best-laid plans can be hard to put into action.

SAVE

THE government's 25% savings top-up will disappear as soon as our Special Savings Incentive Accounts mature over the next 12 months. But the banks are keen to keep us saving month after month with a new range of SSIA follow-on products.

AIB is offering a marketleading rate of 5% interest but only until the end of 2007 and only on savings of 300 a month or less.

Bank of Ireland pays a lower rate of 4% interest but it is available for up to 18 months and savers can put away up to 1,000 each month.

Both accounts will be available from 1 June but you do not have to wait that long to earn a decent rate of interest. Anglo Irish Bank pays 4.5% interest for two years on savings of 100 1,000 a month with no strings attached.

Bank of Scotland (Ireland) is also open for business before the first SSIAs mature. Its 4% rate of interest, available until the end of next year, is lower than Anglo's but savers can deposit 10,000 upfront and then top up by anything from 10 to 750 a month. The downside is they will be penalised for making more than two withdrawals a year.

With the exception of Anglo, all the banks track the European Central Bank rate, so savers can be sure of getting the full benefit of future interest rate increases.

ONE TO WATCH

IF a loved one was killed in a car crash, would you expect a claim for life insurance to be thrown out because he or she was a secret smoker or had failed to disclose a problem with diabetes?

According to Martin Duffy, senior manager for underwriting and claims at Irish Life, insurers are entitled to reject such claims, even when the information withheld has nothing to do with the claim.

Being economical with the truth in order to lower your premium is likely to backfire if you or your family has to make a claim, he says.

Writing in Irish Broker magazine, Duffy says: "If material facts have not been disclosed, there would certainly be a risk that a claim may not be paid or not paid in full. While customers welcome cheap premiums, the fact pales into insignificance when a widow or a claimant does not get paid what they expect."

Despite the warning, Duffy said Irish Life had rejected only 1.3% of life insurance claims last year on the grounds of material non-disclosure. The rejection rate rose to 5% for critical illness insurance, however.

The pitfalls to watch out for are spelled out in a new guide from the Irish Insurance Federation. It advises consumers to err on the side of caution when applying for life insurance.

"Where you are in doubt about whether or not some information is relevant, you should disclose it and allow the life assurance company to decide, " it states.