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Money Management: Reestablishing Yourself

Target Audience: Ex-Cons

Audience Profile
To understand how to assist ex-cons, it’s helpful to recognize the realities of leaving
prison and reentering society.

Men and women leaving prison are often homeless, poor, and struggling to stay
substance-free. There are few supportive services available to help them re-establish
their lives so they can become contributing members of society. In 2009, a record
630,000 inmates—an average of 1,600 a day— will walk out of US prisons and back into
society, according to the Urban League.

For most ex-cons, the journey of successful social reentry relies on finding and keeping
a job. That, say experts, is a tough task made tougher by a faltering US economy and
growing unemployment. Many ex-cons leave prison with $25 - $50 in "gate money" and
30 days to find work or risk going back to jail.

Ex-cons must also cope with the prospect of backsliding. According to the Bureau of
Justice Statistics, two-thirds of ex-cons are rearrested and nearly one-half are
reincarcerated within three years of being released from prison.

Even if a parolee or ex-con finds work, a recent Princeton University research paper
suggests that incarceration will confer a "wage penalty" of 10 to 20 percent. Fitting in
can be hard. The typical ex-con or parolee lacks job references, a stable work history,
transportation, housing, a telephone, or work clothes.

Program Overview
For ex-cons, reentering society requires finding and keeping a job…and learning how to
manage the money they earn. Establishing a solid financial foundation is essential to
being able to afford housing, ensuring transportation to and from work, accessing skills
to earn a higher paying job, and doing more than just getting by day-to-day. The key to
this short program is to encourage participants to take important steps to reestablish
themselves financially so they can stay out of prison. This 60-minute program is
designed to provide participants with a few financial tools to create a realistic budget,
establish a banking relationship, and avoid money traps.

Facilitator’s Preparation:
 Review this guide and complete your own set of the accompanying
worksheets.
 Review the suggested length for each topic noted as (10) or (15) and so on.
This session is designed to be 60 minutes (1 hour) from Welcome to Wrap.
 Consider your own job-hunting experience. Have you been reasonably
successful in landing jobs that paid well? Have you ever struggled to make
ends meet? Was there ever a time when you felt overwhelmed at a new job
because you weren’t “up to speed”?
 Think about your own financial situation. Do you have a monthly spending
plan? Have you ever considered accessing a payday loan? Do you know

Project Independence – Ex-cons Money Management 1


anyone who has used a cash-checking outlet? Have you or anyone you know
been a customer of Rent-to-Own businesses? Are there some money
management lessons learned from your own experiences that may be helpful
to share?
 Consider that when it comes to talking about money, sharing your own
successes and challenges may be more engaging and effective than
appearing to be lecturing.

Materials Needed:

 Flip chart and easel or marker board; markers


 Pencils for participants
 Copies of My Expenses worksheet
 Copies of My Personal Spending Plan worksheet
 Copies of Choosing a Bank That’s Right for You worksheet (plan on
providing at least three copies per person)
 Copies of My Action Plan worksheet

How to Facilitate this Session

Welcome
(8) Introduce yourself and express your pleasure in sharing money
management tools that can be used to help participants reestablish a
place in society.

 Have each participant introduce him/herself and share one current


financial concern. List the concerns on the flip chart or marker board.

 Share the program objectives and tie them back to the list of concerns.
• Create a realistic spending plan
• Establish a banking relationship
• Avoid money traps
• Commit to an action plan

Making a Living versus Getting By


(25) Suggest to participants that while many people who leave prison end up
back again later, it is possible to reenter society, reestablish yourself, and
remain on the outside. One essential ingredient is learning and practicing
sound money management skills.

?Ask participants how many of them have been successful managing


their money in the past.

 Divide participants into small groups of 3-4. Direct them to think of the
kinds of expenses they may encounter as they re-enter society. Allow
participants 5-7 minutes to complete this activity.

 When time is up, randomly call on groups to share one expense they
identified. Write responses on flip chart or marker board. Repeat until all
expenses have been exhausted.

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 Distribute My Expenses worksheet. Compare participants’ list of
expenses against worksheet.

 Stress that we all have a limited amount of money, and it’s important to
make decisions on a daily basis about how to manage the money we do
have.

 Review the three columns on My Expenses worksheet (budgeted


amount, actual amount spent, and savings/loss). Answer any questions
and check for understanding.

 Explain that many people resist setting up and using a spending plan.
However, people who create a monthly spending plan and track their
expenses are more likely to succeed financially! Using a spending plan
can mean the difference between making a living and just getting by
paycheck-to-paycheck.

?Ask participants what information they still need in order to create their
own spending plans.

 Distribute My Personal Spending Plan worksheet. Review the sources


of income and the three columns provided.

 Point out that the My Personal Spending Plan worksheet uses the totals
for each category from the My Expenses worksheet.

 Review the income-to-expenses comparison. Answer any questions and


check for understanding.

?Ask participants if they have an established banking relationship.

Keeping Your Money Safe


(10) Explain that setting up a checking and a savings account not only keeps
your money safe, it also helps you avoid problems in getting your checks
cashed.

 Encourage participants to shop at several banks and credit unions and


take time to compare costs and features for the most affordable account.
It’s also smart to consider locations when selecting a bank.

 Distribute Choosing a Bank That’s Right for You worksheet. Review


the worksheet and answer any questions participants may have about the
information listed. Suggest that if they currently have a banking
relationship it might be helpful to visit their bank and complete the
worksheet there. If not, they should visit several banks for a comparison.
(Be prepared to hand out several copies of the worksheet to participants.)

 Check that participants understand the differences between debit, credit,


and ATM cards. Provide a brief explanation of all three, if necessary.

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 Explain that if participants have had bank problems in the past they may
experience difficulty in opening up a checking or savings account.
Therefore, one of the first questions to ask when choosing a bank is
whether on not, as an ex-con, he/she will be allowed to open an account.

 Encourage participants to seek assistance from their bank representative


if they do not have experience in using a checking or savings account.
They will be happy to help.

 Suggest that participants ask their employers if the company offers direct
deposit of payroll checks. Having checks automatically deposited into
your bank account is not only convenient, it can also help you to avoid
spending it on things you don’t need.

?Ask participants if they have ever used or considered using a check


cashing outlet or getting a payday loan.

Avoiding Money Traps


(10) Reiterate that managing money can be challenging at times, especially
when unexpected expenses occur and you need money. When people
feel anxious about their finances, it’s easy to make a mistake and get
caught in a money trap.

?Ask participants if they can name at least four common money traps. As
participants name a money trap, write the trap on the flip chart or marker
board.

 Review the list against the list below and use the information provided to
discuss each trap.

• Check cashing outlets charge a percentage of your total


check. That’s like pouring money down the drain. Why
give anyone a piece of your hard-earned pay?

• Payday loans are quite costly when you do the math.


Consider that a payday loan may charge you $20 to
borrow $200 for two weeks. Then if you cannot pay this
back, you must rollover the loan for another $20 fee plus
high interest on the amount you borrow and rollover.
Consumers will roll over these loans about 6 times on
average. This means you paid $120 dollars in fees alone
to borrow $200.

• Pawnshops may give you a fraction of what something is


worth when you try to sell it to them, and then charge you
much more than this to get the item back. In addition,
pawnshops often make title loans that ultimately mean you
could lose your car! If you miss a payment, the pawnshop
can have your car repossessed.

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• Tax refund anticipation loans (RAL) are also more costly
than you imagine. The tradeoff of getting your refund
immediately is that you significantly reduce the amount you
get back since the RAL has a high fee.

• Rent-to-own stores tempt you because the weekly rate


seems so affordable and, in time, you will own the item.
Renting-to-own is actually very expensive because the
length of the loan is usually more than a year and you end
up paying two or three times what the item originally cost.
For example, a $400 TV at $15 a week for 65 weeks =
$975, not including sales tax and delivery costs.

• Credit card “free” checks are not free. Using a check tied
to your credit card means that you will be charged the
same rate of interest (sometimes a higher rate) on the
amount of your check, as if you used your credit card to
pay for the item.

 Explain that each of these “quick fixes” is actually a money trap. Once
you get caught, it’s tough to get out. The traps may put you deeper into
debt and cause greater anxiety.

 Suggest that by using the tools discussed today, participants can avoid
these money traps altogether.

?Ask participants if they are ready to take on the responsibility of


managing their money.

Wrap
(5) Review the list of concerns and note which ones were addressed and
which ones will need to be addressed at a later time.

 Review the topics covered in the session:


 Estimating and tracking expenses
 Creating a monthly spending plan
 Establishing a banking relationship
 Setting up direct deposit of payroll checks
 Avoiding money traps

 Remind participants to use their My Personal Spending Plan


worksheets.

 Encourage participants to establish a banking relationship after shopping


around and completing several Choosing the Bank That’s Right For
You worksheets.

 Distribute My Action Plan worksheets. Encourage participants to take a


few minutes to complete their worksheets to ensure that they get started
reestablishing themselves immediately.

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 Thank participants for their attendance and let them know how much you
enjoyed spending an hour with them. Provide them with any additional
information as agreed upon with your agency/prison contact.

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My Expenses
Directions: List the amounts you think you’ll spend in the first column. Then fill in your actual costs
in column two. Subtract your actual amount form your estimated amount to see how much you’re
saving or over-spending.

Expense Estimated Amount Actual Amount Spent Savings/Loss


Housing
• Rent/mortgage $ _____________ $ ________________ $ _________
• Utilities $ _____________ $ ________________ $ _________
• Phone $ _____________ $ ________________ $ _________
• Other $ _____________ $ ________________ $ _________

Food $ _____________ $ ________________ $ _________

Transportation
• Car payment $ _____________ $ ________________ $ _________
• Gas/Repairs $ _____________ $ ________________ $ _________
• Insurance $ _____________ $ ________________ $ _________
• Bus/light $ _____________ $ ________________ $ _________
rail/subway
• Other $ _____________ $ ________________ $ _________

Health Care
• Insurance $ _____________ $ ________________ $ _________
• Co pay $ _____________ $ ________________ $ _________
• Payments $ _____________ $ ________________ $ _________

Loan Payments $ _____________ $ ________________ $ _________


Credit Cards $ _____________ $ ________________ $ _________
School/Training $ _____________ $ ________________ $ _________

Personal/Family
• Child Support $ _____________ $ ________________ $ _________
• Child Care $ _____________ $ ________________ $ _________
• Clothing $ _____________ $ ________________ $ _________
• Toiletries $ _____________ $ ________________ $ _________
• Other $ _____________ $ ________________ $ _________

Legal
• Restitution $ _____________ $ ________________ $ _________
• Other $ _____________ $ ________________ $ _________
Savings $ _____________ $ ________________ $ _________
Entertainment $ _____________ $ ________________ $ _________
Other $ _____________ $ ________________ $ _________

TOTALS $ _____________ $ ________________ $ _________

Project Independence – Ex-cons Money Management


My Personal Spending Plan
Income Estimated Amount Actual Amount Received Over/Under
After-tax wages $ _____________ $ ________________ $ _________
After-tax wages from $ _____________ $ ________________ $ _________
spouse’s income
Tips, bonuses, cash $ _____________ $ ________________ $ _________
from hobbies
Unemployment $ _____________ $ ________________ $ _________
compensation
Public Assistance $ _____________ $ ________________ $ _________
Child support $ _____________ $ ________________ $ _________
Food Stamps $ _____________ $ ________________ $ _________
Other $ _____________ $ ________________ $ _________
Other $ _____________ $ ________________ $ _________

TOTALS $ _____________ $ ________________(a) $ _________

Expense Estimated Amount Actual Amount Spent Savings/Loss


Housing $ _____________ $ ________________ $ _________
Food $ _____________ $ ________________ $ _________
Transportation $ _____________ $ ________________ $ _________
Health Care $ _____________ $ ________________ $ _________
Loan Payments $ _____________ $ ________________ $ _________
Credit Cards $ _____________ $ ________________ $ _________
School/Training $ _____________ $ ________________ $ _________
Personal/Family $ _____________ $ ________________ $ _________
Legal $ _____________ $ ________________ $ _________
Savings $ _____________ $ ________________ $ _________
Entertainment $ _____________ $ ________________ $ _________
Other $ _____________ $ ________________ $ _________

TOTALS $ _____________ $ ______________(b) $ _________

Compare Actual Income and Expenses


Actual monthly income $ _______________________________(a)
(minus) actual monthly expenses - $ _______________________________(b)
$ _______________________________

Do you have enough income to cover your expenses? If not, can you increase your
income? Review your expenses and determine if there are any you can cut or at least
decrease.

Project Independence – Ex-cons Money Management


Choosing a Bank That’s Right for You
Name of bank: __________________________________________________________
Phone number: _________________________________________________________
Branch information:
 Location nearest your home: ______________________________________
 Location nearest your work:_______________________________________
 Number of branches: ____________________________________________
Number of ATMs: ________________________________________________________
Bank hours: ____________________________________________________________
Are your funds FDIC insured? ______________________________________________
Types of accounts: _______________________________________________________
Amount of initial deposit required: ___________________________________________
Fees:
 Must maintain a minimum daily balance of: __________________________
 Must maintain an average daily balance of: __________________________
 Monthly maintenance charge: ____________________________________

Interest:
 How much interest do you earn on your account? _____________________
 How is it calculated? ___________________________________________

Charges:
 Printing checks: ______________________
 Bouncing checks: _____________________
 Stopping checks: _____________________
 Certifying checks: _____________________
 Incarceration penalty: __________________

Balance inquiries:
 At teller window: ______________________
 Over the Internet: _____________________
 At ATMs: ____________________________
 By phone: ____________________________

Special services:
 Internet banking: ______________________
 Fund transfer by phone: ________________
 Debit card: ___________________________
 Educational classes: ___________________

Project Independence – Ex-cons Money Management


My Action Plan
Main message for me from this session:

My personal commitment to action:

Obstacles that may get in my way:

What I need to do to succeed:

Use Limitations. These materials are intended for non-commercial educational and instructional use only. These
materials may not be used in connection with any sale, advertisement, endorsement or promotion of any service,
product, person or business and may not be commercially published, sold or offered for sale.

Project Independence – Ex-cons Money Management