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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
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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

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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.

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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 Housing
• • • • Rent/mortgage Utilities Phone Other

Estimated Amount

Actual Amount Spent

Savings/Loss

$ _____________ $ _____________ $ _____________ $ _____________ $ _____________

$ ________________ $ ________________ $ ________________ $ ________________ $ ________________ $ ________________ $ ________________ $ ________________ $ ________________ $ ________________ $ ________________ $ ________________ $ ________________ $ ________________ $ ________________ $ ________________ $ ________________ $ ________________ $ ________________ $ ________________ $ ________________ $ ________________ $ ________________ $ ________________ $ ________________ $ ________________ $ ________________

$ _________ $ _________ $ _________ $ _________ $ _________ $ _________ $ _________ $ _________ $ _________ $ _________ $ _________ $ _________ $ _________ $ _________ $ _________ $ _________ $ _________ $ _________ $ _________ $ _________ $ _________ $ _________ $ _________ $ _________ $ _________ $ _________ $ _________

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

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My Personal Spending Plan
Income
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

Estimated Amount

Actual Amount Received

Over/Under

$ _____________ $ ________________ $ _____________ $ ________________ $ _____________ $ ________________ $ _____________ $ ________________ $ _____________ $ _____________ $ _____________ $ _____________ $ _____________ $ ________________ $ ________________ $ ________________ $ ________________ $ ________________

$ _________ $ _________ $ _________ $ _________ $ _________ $ _________ $ _________ $ _________ $ _________ $ _________

TOTALS

$ _____________ $ ________________(a)

Expense
Housing Food Transportation Health Care Loan Payments Credit Cards School/Training Personal/Family Legal Savings Entertainment Other

Estimated Amount

Actual Amount Spent

Savings/Loss

$ _____________ $ _____________ $ _____________ $ _____________ $ _____________ $ _____________ $ _____________ $ _____________ $ _____________ $ _____________ $ _____________ $ _____________ $ _____________

$ ________________ $ ________________ $ ________________ $ ________________ $ ________________ $ ________________ $ ________________ $ ________________ $ ________________ $ ________________ $ ________________ $ ________________ $ ______________(b)

$ _________ $ _________ $ _________ $ _________ $ _________ $ _________ $ _________ $ _________ $ _________ $ _________ $ _________ $ _________ $ _________

TOTALS

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.

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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:

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Interest:

Must maintain a minimum daily balance of: __________________________ Must maintain an average daily balance of: __________________________ Monthly maintenance charge: ____________________________________

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Charges:

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

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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: ___________________

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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.

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