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Abstract

This study examines how financial literacy influences financial behavior as measured by spending, saving and investment and borrowing behavior of university students. The study was informed by the theory of planned behavior. Explanatory research design was used to test the research hypothesis. Data was collected through using a structure questionnaire which was administered both physically and online.  446 random selected students across Universities in Tanzania participated in the study, and simple linear regression analysis was used to establish the effect of financial literacy on financial behavior.  It was established that majority of the students are considered financially illiterate. However, the more years they spend at the university, the more they improve their financial literacy level.  Students were established to portray an above average financial behavior as reflected in their spending, savings, investment and borrowing behavior.  Theoretically the paper contributed to the theory of planned behavior demonstrating that behavior as a function of attitude and so as intention, is a reward of among others, learning. The findings suggest that it is important to pursue a policy mix that pushes financial literacy and financial education with potential substitutes like financial advice. Financial literacy programme should be included in University curricula from the initial years of undergraduate studies. Universities should continue working in collaboration with financial institutions and inculcate savings and investment behavior to students through training and advice.

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