Abstract: Financial literacy enhances individuals’ ability to obtain returns in the labor market, thereby helping to narrow the urban-rural income gap and promote integrated urban-rural development. Based on data from Shandong, Henan, Sichuan and Jiangxi Provinces, this study employs the Ordinary Least Squares (OLS) model and the Mediation Effect Model to estimate the impacts of financial literacy on rural households’ non-farm income and to explore its underlying mediation mechanisms. Results indicate that improved financial literacy is associated with a significant increase in non-farm income. Heterogeneity analysis reveals a “pro-poor” pattern: the income-enhancing effect is more pronounced among rural households with elderly members and among those with lower levels of educational attainment and income. Further mechanism analysis shows that financial literacy primarily affects non-farm income by expanding social networks, reallocating family insurance portfolios, and improving employment and entrepreneurial decision-making. Based on these findings, this study recommends incorporating financial literacy education into regular rural human capital investment programs. An integrated grassroots service system that combines digital finance with social networks should also be established in rural areas, with targeted training and services provided to relatively disadvantaged groups. These measures will help improve the rural income distribution and advance the achievement of common prosperity.