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Financial Education & Recidivism

Updated: Nov 26, 2023

"One way to lower the U.S. incarceration rate could be to give inmates financial knowledge they need to get by upon reentry." --- Center for Financial Inclusion

In a recent study, incarcerated individuals cited several barriers to financial services that contribute to their lack of financial knowledge, including high overdraft fees, checking account minimum balance requirements, and a general mistrust of banks. Incarcerated people were less likely to have ever had a checking account or credit card, and more than twice as likely to take out payday loans. To address some of these issues, financial literacy educators often suggest avoiding commercial banks in favor of joining a credit union.

How Can Financial Education Help?

Financial education programs focus on acquiring knowledge and developing skills, with the goal of helping people gain a better understanding of how to save money, build credit, and effectively budget. Basic understanding of how to manage personal finances may help ensure people do not turn back to crime in desperation.

Four in ten adults are unable to cover a $400 emergency expense. This number is likely much higher for formerly incarcerated people.

With nearly 1.5 million people in prison and 650,00 returning home every year, taking a more holistic approach to re-entry can make a meaningful difference in helping people successfully reintegrate. According to the the Center for Financial Inclusion: "With nearly 90 percent of inmates of working age and 1 in 28 American children with a parent behind bars, it is economically and socially critical that we support rehabilitation efforts to help offenders successfully reintegrate. While financial literacy alone may not be the leading cause of reduced recidivism rates, it can equip offenders with essential knowledge to support themselves upon release."

Access to financial education provides formerly incarcerated people with important foundational information to help get them back on their feet. Knowledge is empowering and helps people look forward and start planning for the future.


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