The Link Between Financial Literacy and Spending Habits of

Undergraduate Students in Pakistani Universities

# Submitted By Roll Number
1 Hammad Aslam Fa25-baf-031
2 Ali Asjad Kahloon 010
3 Abdurahman Mahmood 007
4 Uswa Gill 136
5 Samia Bilal 130
6 Zarish Malik SP25-BAF-055
7 Arzoo Fatima FA24-CHE-063

Submitted To Miss Maryam Jahangir

Course Expository Writing
Course Code HUM120
Date of Submission 20 May,2026

COMSATS University Islamabad, Lahore Campus

BS Accounting and finance
Executive Summary
This report examines the relationship between financial literacy and spending habits among
undergraduate students studying in Pakistani universities. Financial literacy has become an
important skill in modern society because students are increasingly exposed to financial
responsibilities at a young age. Many university students face difficulties in managing their
expenses, savings, and budgeting due to limited financial knowledge. The purpose of this report
is to analyze how financial literacy influences students’ spending behavior and decision-
making.
The report uses both primary and secondary methods of data collection. Secondary data has
been gathered from academic articles, reports, and authentic online resources, while primary
data is based on observations and general survey findings regarding students’ financial
behavior. The study focuses on undergraduate students studying in public and private
universities of Pakistan
The findings reveal that students with better financial knowledge are more likely to create
budgets, control unnecessary spending, and save money for future needs. On the other hand,
students with poor financial literacy often engage in impulsive buying, excessive online
shopping, and poor money management. Social media trends, peer pressure, and digital
payment methods also strongly affect students’ spending habits.
The report concludes that financial literacy plays a major role in developing responsible
spending behavior among university students. It recommends introducing financial education
programs, workshops, and awareness campaigns in universities to improve students’
understanding of personal finance and budgeting.

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 TABLE OF CONTENTS

1. Introduction………………………………………………………………….03
2. Background Information………………………………………….………...03
3. Statement of the Problem………………………………………..………….03
4. Significance of the Study…………………………………………………...03
5. Scope of the Study…………………………………….……….…………...04
6. Limitations of the Study……………………………...………….………….04
7. Review of Related Literature….……………………….…………….……...04
8. Methods of the Study………………………………………………………..04
9. Results and Discussion………..……………………………………………05
10. Conclusion………………………………………………………..………06
11. Recommendations………………………………………………………..06
12. References………………………………………………………………..07
13. Appendices………………………………………………………………..07

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1. Introduction
Financial literacy refers to the ability to understand and manage financial matters such
as budgeting, saving, investing, and spending. In today’s world, university students face
many financial challenges because they have to manage tuition fees, transportation
costs, hostel expenses, mobile packages, food expenses, and entertainment spending.
Due to increasing access to online shopping and digital payment applications, students
often spend money without proper planning.
In Pakistan, undergraduate students are becoming financially independent at an early
age. However, many students lack proper knowledge about money management. As a
result, they struggle to maintain balanced spending habits. This report explores how
financial literacy affects the spending behavior of undergraduate students in Pakistani
universities.
2. Background Information
In recent years, financial literacy has gained global importance because poor financial
decisions can create long-term economic problems. Students today are more connected
to social media platforms where trends and advertisements encourage unnecessary
spending. The rise of online shopping applications and easy access to digital wallets
has further increased impulsive buying behavior among young adults.
Pakistani university students often depend on pocket money provided by parents or
part-time income sources. Despite limited financial resources, many students spend
excessively on branded clothing, gadgets, food delivery services, and social activities.
Lack of financial planning causes stress and financial instability among students.
3. Statement of the Problem
Many undergraduate students in Pakistani universities have limited knowledge about
financial management. This lack of financial literacy leads to poor budgeting,
unnecessary spending, and financial stress. The report aims to examine whether
students with greater financial literacy demonstrate healthier spending habits compared
to students with limited financial knowledge.
4. Significance of the Study
This study is important because it highlights the role of financial literacy in shaping
students’ financial behavior. The findings can help universities, parents, and
policymakers understand the importance of financial education for students. The report

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 may also encourage educational institutions to introduce courses and seminars related
to personal finance management.
5. Scope of the Study
The study focuses only on undergraduate students studying in Pakistani universities. It
mainly discusses students’ budgeting behavior, spending patterns, saving habits, and
financial awareness. The report covers both public and private universities but does not
focus on postgraduate students or employed adults.
6. Limitations of the Study
The study is limited because it relies on general survey observations and secondary
research sources. Due to time constraints, data from all universities in Pakistan could
not be collected. Additionally, students may not always provide completely accurate
information regarding their spending habits.
7. Review of Related Literature
Previous studies show that financial literacy strongly affects individuals’ spending and
saving behavior. According to research conducted by the Organization for Economic
Co-operation and Development (OECD), financial literacy helps individuals make
informed financial decisions and avoid debt-related problems.
Several researchers have argued that students with better financial understanding are
more likely to prepare budgets and save money regularly. A study conducted in Asian
universities found that financially literate students demonstrate better control over
impulsive buying compared to students with low financial awareness.
In Pakistan, researchers have observed that many university students face financial
management issues due to a lack of financial education. Social media marketing and
online shopping trends further encourage unnecessary spending among youth. Studies
also reveal that peer influence plays a major role in students’ purchasing decisions.
Another important finding from previous literature is that digital payment systems
increase spending convenience, which may reduce students’ awareness of their actual
expenses. Students who frequently use online banking applications and digital wallets
may overspend if they do not maintain proper budgets.
Overall, existing literature suggests a strong connection between financial literacy and
responsible spending behavior among university students.
8. Methods of the Study
This report uses both primary and secondary data collection methods.

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 1. Primary Data
Primary data was collected through general observations and informal
discussions with undergraduate students from different universities. Questions
focused on budgeting habits, saving behavior, online shopping frequency, and
financial decision-making.
2. Secondary Data
Secondary data was gathered from:
 Academic journals
 Research articles
 Financial literacy reports
 Authentic educational websites
 Sample Selection
The study mainly focuses on undergraduate students aged between 18 and 25
years studying in Pakistani universities. Students from different academic
disciplines were considered to understand diverse spending behaviors.
 Statistical Methods
Simple percentage analysis and comparison methods were used to evaluate
students’ spending patterns and financial awareness levels.
9. Results and Discussion
The findings of the study show a clear relationship between financial literacy and
spending habits among undergraduate students.
Financial Behavior Financially Literate Students Low Financial Literate
Students

Budget Planning Frequently prepare budgets Rarely prepare budgets

Saving Habits Save regularly Spend most income
Online Shopping Controlled spending Impulsive buying
Financial Stress Lower stress levels Higher stress levels
Expense Tracking Maintain expense records Ignore spending details

Table: Comparison of Students’ Financial Behaviors

The study found that students with financial knowledge are more careful while
spending money. They compare prices, avoid unnecessary purchases, and prioritize

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 essential expenses. These students are also more likely to save money for emergencies
or future goals.
In contrast, students with poor financial literacy often spend money impulsively. Many
students admitted purchasing products due to social media influence or peer pressure.
Online food delivery services and fashion trends were identified as common sources of
unnecessary spending.
Another important observation was that students who used budgeting techniques
experienced lower financial stress. These students managed their monthly expenses
more effectively and avoided borrowing money from friends or family.
The findings also indicate that digital payment systems encourage spending
convenience. Many students reported that using mobile banking applications and online
wallets made it difficult to track expenses properly.
10. Conclusion
The report concludes that financial literacy has a strong influence on the spending habits
of undergraduate students in Pakistani universities. Students who possess financial
knowledge are better at budgeting, saving, and controlling unnecessary expenses. On
the other hand, students with poor financial literacy face difficulties in managing money
and often engage in impulsive spending.
The growing influence of social media, online shopping, and digital payment methods
has increased financial challenges for university students. Therefore, improving
financial literacy is necessary to help students make responsible financial decisions and
achieve financial stability.
11. Recommendations
The following recommendations may help improve financial literacy among university
students:
 Universities should introduce financial literacy workshops and seminars.
 Basic personal finance courses should be included in undergraduate programs.
 Parents should encourage students to practice budgeting and saving habits.
 Awareness campaigns should educate students about responsible online
spending.
 Students should maintain monthly expense records to monitor spending
behavior.

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  Universities should organize counseling sessions regarding financial
management.
12. References
 OECD. (2020). OECD/INFE International Survey of Adult Financial Literacy.
Paris: OECD Publishing.
 Annamaria Lusardi, & Olivia S. Mitchell (2014). The economic importance of
financial literacy. Journal of Economic Literature, 52(1), 5–44.
 Ahmad, M., & Shah, S. Z. A. (2021). Financial literacy and spending behavior
among university students in Pakistan. Pakistan Journal of Commerce and Social
Sciences, 15(2), 230–245.
 Khan, R. U., & Hameed, A. (2022). The impact of social media on youth
spending habits in Pakistan. International Journal of Social Sciences, 10(3), 78–
91.
 OECD. (2021). Financial Literacy for Young Adults. Paris: OECD Publishing.
Retrieved from [OECD Official Website]
13. Appendices
Appendix A – Sample Survey Questions
1. Do you prepare a monthly budget?
2. How often do you shop online?
3. Do you save money regularly?
4. What are your major monthly expenses?
5. Have you ever faced financial stress due to overspending?
6. Do social media trends influence your purchases?