One option to promote capital accumulation is through mobilization of savings. This paper looks at Financial Capability of Households and Savings in Nigeria based on secondary data from 31,199 households’ national survey earlier conducted by the Central Bank of Nigeria (CBN). Data were analyzed using descriptive statistics and Probit Regression Model techniques in-line with the Life-Cycle Hypothesis (LCH) which asserts that savings behavior varies across life cycles. The analysis of the data reveal that higher levels of financial literacy positively promote savings with formal banking institutions. Again, older aged households seem to exhibit greater propensity to save over others.  On gender disparities, it was found that women exhibit lower likelihoods of saving in formal financial institutions compared to men. In another vein, smaller households’ sizes saved more in formal banks than larger households that tend to face challenges that hinder their saving tendencies, leading to increased financial exclusion. It was observed that income from employment is a strong predictor of savings in formal banks while residing in rural areas negatively affects the likelihood of savings in formal banks. These results underscore the need for policies aimed at promoting financial literacy, stable income sources, and access to financial services, particularly in rural areas by the monetary authority in Nigeria. It is therefore recommended that the government and financial institutions should collaborate to implement nationwide financial literacy campaigns targeting diverse demographics, particularly in rural areas and among lower-educated groups. This can achieve through establishment of more financial service outlets, such as microfinance banks and mobile money agents, in rural regions that offer savings products, including flexible deposit accounts and low-fee accounts, to cater to rural needs as well as introduction of social support programmes to promote savings culture in Nigeria.

Keywords: Financial literacy, Savings, Households’ financial capability and rural-urban Disparities