This thesis examines the general relationship between remittances and household expenditures and savings in Nepal by doing a cross sectional analysis of the household survey conducted in 2012 by the researcher. It provides a comprehensive overview of the effect of remittance on spending behavior by looking at common categories like food, non- food and education, and the saving behavior of the remittance receiving households against the nonremittance receiving households by using the matching methods. The study found that the households which receive remittances and which do not receive remittances are different in terms of their income sources. The remittance receiving households depend primarily on nonfarm income like remittances unlike the non- remittance receiving households which depend on the on farm income for their livings. The remittance receiving households spend more and save more. The remittance income alone cannot explain the difference in the household expenditures and savings between the remittance receiving and non- remittance receiving households.