Prison education is a well-established factor in preventing relapses. One of the areas in direst need of education is personal finance, as many inmates are unprepared for the outside world upon release. Unfortunately, due to lack of funding, there are few organized efforts in this area beyond courses by volunteers such as The Ridge Project, ACLU and even peer inmates. This may be a mistake, as there are several reasons why inmates and society benefit from improved financial literacy.Reason 1: It Is an Essential Life Skill
Many inmates have never learned healthy money habits. At the same time, it is those with low education and low income that most need the skills to make money stretch while avoiding unnecessary fees and penalties. All adults have to deal with the realities of personal finance. You need basic budgeting skills to make sure all the bills get paid so the lights stay on while still having food on the table at the end of the month. Knowing how to balance a checkbook avoids overdraft fees and unpaid bills. A poor credit rating makes insurance more expensive. It is well established that education is the best guarantee against criminal relapses. Having a basic grasp of money management is as important for functioning in civil society as being able to read and write.Reason 2: Avoiding a Debt Quagmire
Inmates typically have poor credit ratings and/or spotty work histories upon release, making them unattractive to regular creditors. Meanwhile, predatory lenders are eager to extend lines of credit with high interest rates and small monthly payments, effectively creating an ever-increasing burden of debt. If unchecked, this downward spiral may cause a return to criminal activities borne of financial desperation.
Teaching the true cost of compounding interest and the impact of minimum payments would help inmates make informed decisions when released. The steep penalty fees imposed for delinquent accounts, overdrafts and collection fees are also examples of the kind of unnecessary burdens that could be avoided with prison education.Reason 3: Budgeting Teaches Responsibility
Many crimes are not planned but rather spur-of-the-moment actions turned tragic mistakes because of poor impulse control. Budgeting teaches long-term thinking and discipline. By foregoing an immediate reward, a greater reward can be reaped in the future.
A strict budget also adds another layer of resistance to the temptation of alcohol and substance abuse. These behaviors are not just something to avoid; it makes the financial impact of spending the rent money on alcohol or marijuana more tangible.
Budgeting can also help many inmates stay current on child support payments; this is a common sore point that harms personal relations and may cause feelings of despair and despondency.Reason 4: Improved Employability
Almost all employers run at least some background checks on potential employees. A poor credit rating, the usual result of bad money management skills, can be an immediate disqualifier. A bad credit rating with high balances and delinquent accounts gives the impression of unreliability, often ruling out the applicant from any position involving cash transactions and the like.
A bad credit history may not be a huge obstacle to a minimum-wage job, but an inmate who earned a college degree while serving his sentence certainly does not need an additional disadvantage. He is already competing with nonconvicts for qualified jobs; adding a poor credit score just might close the door altogether. Budgeting skills also enable him to afford the kind of clothing needed to convey a professional image at work, bettering the odds of career advancement down the road.Reason 5: Future Home Ownership
Home ownership is another well-established factor for promoting social stability. Adopting sound financial habits upon release helps inmates build good track records with their banks, laying the groundwork for approved mortgage applications in the future.