The Impact of Financial Literacy on Saving Behavior among Undergraduate Students

Abstract

Saving behavior played a crucial role in ensuring long-term financial stability, particularly among undergraduate students who were transitioning from financial dependence on their families to managing their own finances. However, many students lacked adequate financial knowledge and essential money-management skills, which resulted in overspending, consumer debt, and insufficient emergency savings. This study synthesized concepts and theories related to financial literacy and saving behavior, revealing that financial literacy, which encompassed basic financial knowledge, budgeting skills, and understanding of investment, borrowing, and taxation, had a positive impact on students’ saving behavior. Financial decision-making ability served as a key mediating factor, enabling individuals to apply financial information to analyze options, plan effectively, and control spending responsibly. The findings indicated that students with higher financial literacy tended to save more consistently, set clearer saving goals, manage expenses wisely, and maintain emergency funds to handle unexpected situations. In the digital financial era, where students have easy access to financial products and credit services, financial literacy has become even more essential to prevent financial mismanagement and promote responsible financial behavior. Overall, the study highlighted that strengthening financial literacy could build a solid foundation for long-term financial well-being, reduce the risk of debt accumulation, and enhance students’ quality of life. The results emphasized the need for higher education institutions to integrate financial education into curricula and student development programs to foster financially capable and responsible young adults.