While saving and investments are the key instruments to foster economic growth, financial inclusion is also important for economic development. Recent literature has paid attention to the importance of financial literacy which is one reason of low financial inclusion. The low financial literacy and low level of saving, investment is largely evident in developing countries. This study examines the causal impact of financial literacy on saving and investment behavior in case of Pakistan. We contribute to the literature by addressing the endogeneity concerns and measurement error in the financial literacy variable by using instrumental variable (IV), propensity score matching (PSM), and full matching IV technique. This study has used the Access to Finance (A2F) 2015 individual level survey data which is conducted by State Bank of Pakistan. Results suggested the positive and significant impact of financial literacy on saving and investment behavior. We distinguish the formal saving and informal saving behavior. After controlling for endogeneity concerns, results show that financially literate individuals likely to have 17 percent higher saving with banks compared to financially illiterate persons. Financially literate persons also aware to the borrowing for investment purpose. Supervisor: Dr. Naseem Faraz Co-Supervisor: Dr. Hafsa Hina