Title: Exploring the Relationship Between Financial Literacy and Savings Behavior in Tanzania's Low-Income Households. A case Study of Kilolo District.
Authors: Yohana Tweve and Hawa Jumanne
Volume: 9
Issue: 2
Pages: 144-155
Publication Date: 2025/02/28
Abstract:
- This study aimed to explore the relationship between financial literacy and savings behavior among low-income households in Kilolo District, Tanzania. Using a mixed-methods approach, the study collected both quantitative and qualitative data from 200 respondents, including household surveys and in-depth interviews. The primary objective was to identify key factors influencing financial knowledge, attitudes, and behaviors related to saving. The findings revealed that while respondents possessed basic financial knowledge, significant gaps existed in understanding budgeting, inflation, and available financial services. Additionally, attitudinal factors such as a low preference for saving over spending and distrust in financial institutions were prevalent, which affected overall savings behavior. Financial behaviors such as regular budgeting and active savings were limited, with many households relying on informal savings methods like mobile money and savings groups (VICOBA, SACCOs). Key barriers to saving included low income, high household expenses, and lack of financial literacy. Most households used their savings for immediate needs, such as household expenses (40%), business investments (30%), and education (20%), with only a small portion set aside for emergencies (10%). The study concluded that improving financial literacy, promoting formal savings mechanisms, and addressing income-related challenges could significantly enhance savings behavior and financial security in low-income households. Recommendations include strengthening financial education programs, promoting accessible financial products, and fostering trust in formal financial institutions. This research contributes to a deeper understanding of savings behaviors in Tanzania and offers practical insights for policymakers and financial institutions seeking to improve financial inclusion.