Abstract:
This study investigates the impact of financial literacy on the saving and spending
habits of the young generation in the Kurunegala District of Sri Lanka. The research
problem arises as many youths face financial stress due to weak saving practices,
excessive spending, and limited awareness of money management, despite access to
financial services. Financial literacy, defined as the knowledge and skills to manage
money effectively, is examined under four dimensions: investment literacy, credit
management, budgeting, and understanding interest rates. The main objective is to
assess how these factors influence saving and spending behaviour. A quantitative
method was applied, and data were collected through a structured questionnaire from
384 respondents aged 18–35, selected using Krejcie and Morgan’s sampling table to
ensure statistical validity and representativeness. Data analysis was conducted using
descriptive statistics, correlation, and regression analysis through SPSS. The findings
show that budgeting and credit management have the strongest positive effects on
saving and spending habits, while investment literacy and knowledge of interest rates
also show significant, though smaller, impacts. The study highlights that financial
literacy enables young people to save regularly, control unnecessary expenses, and
make informed financial decisions. These results are valuable for policymakers,
educators, and financial institutions to design effective financial education
programmes that enhance financial capability and promote long-term financial
stability among youth.
