The study examined the impact of financial literacy on university students’ budgeting and spending habits, focusing on Uganda Christian University (UCU). Financial literacy, a crucial life skill, influenced students’ financial decision-making as they transitioned into financial independence. The study employed theoretical frameworks such as the Life-Cycle Hypothesis, Theory of Planned Behavior, and Human Capital Theory to understand how financial literacy affected budgeting and spending behaviors. Using a cross-sectional survey design, data were collected from 324 students through stratified random sampling and analyzed using SPSS. Descriptive statistics, correlation analysis, and multiple regression techniques were used to assess relationships between financial literacy, budgeting practices, and spending habits. Results indicated that financial literacy significantly impacted students’ ability to create and adhere to budgets, track expenses, set financial goals, and maintain emergency funds. Higher financial literacy levels correlated with reduced non-essential spending, lower impulse purchases, and increased savings. Additionally, students from business-related faculties and those with personal income sources demonstrated higher financial literacy compared to their counterparts in other faculties or those financially dependent on parents. The study identified gaps in financial knowledge, particularly in tax awareness, risk diversification, and insurance concepts, and found that informal sources like family served as primary financial educators, while professional financial advisors were among the least utilized resources. Furthermore, financial literacy was found to be a strong predictor of students' financial behavior, with students who had higher literacy levels demonstrating more responsible financial management practices. The findings underscored the need for comprehensive financial education programs at UCU, integrating experiential learning approaches, digital financial tools, and structured financial literacy training to enhance students’ financial competence. The study recommended embedding financial literacy into university curricula, increasing