Car Insurance

Offenders involved in this study lacked basic financial knowledge which presented a barrier to their success upon release. The researcher modified existing curriculum and created a course in financial literacy for offenders within a medium security correctional facility based upon their personal experiences. The offenders gained financial knowledge as measured by a pretest and posttest covering financial topics. Offender financial histories were identified in several areas such as savings and debt, banking experience, and housing. The findings suggest students made gains in knowledge. This class covering money management is of great benefit to the offender as they prepare to once again reenter today’s society.

What does one teach in a financial literacy class targeted toward offenders? The nature of correctional education is very diverse. How can one meet the needs of an offender who has been incarcerated for 30 years? Thirty years ago the minimum wage was close to $2.65 per hour; a gallon of gas sold for around $.80 per gallon; you could purchase a new car for approximately $5,000. Visa cards were just beginning to emerge and grow in usage. Family dynamics were very different in the late 1970s with many husbands expected to be the breadwinners in their household.

Consider also the situation of an offender who has been locked away in prison since before he could even drive. What financial skills will this offender need in order to be successful upon release? He may have never held a job, written a check, or found housing for himself. It is likely that he will obtain employment at a salary close to minimum wage. Today, credit cards are easily obtained, and advertising sells the idea of a lifestyle that many will not be able to afford; especially those with lower incomes.

The typical correctional education classroom is by nature a rather formal, reserved environment. Working as a correctional educator makes one aware of some of the financial experiences encountered by offenders. Sharing of personal experiences in a classroom setting is not always a routine practice in correctional education. Studies have shown that there is value in incorporating these personal experiences into learning. In planning for a class in financial literacy offender experiences were incorporated into the curriculum, and student gains in knowledge were measured as well.

Literature Review

The current economic climate in the United States is growing ever more complex. Consumers have a growing number of financial decisions that they must make. Increased advertising and marketing can lead American citizens to make clouded decisions. National statistics show that money management is of immediate concern here in the U.S. The bankruptcy rates have doubled over the past ten years (Borja, 2004). ‘An estimated 10 million American adults have no relationship with a mainstream financial services provider. One third of these adults are African American and 29% are Hispanic. One-fourth of all lowerincome families are un-banked” (Sarbanes, 2002, ¶ 4). Many offenders affirm these statistics as they generally have lower incomes, minority backgrounds and no previous banking experience.

One of the reasons for these economic trends might be attributed to a lack of understanding about Investing and financial planning. A small number of adults today are able to recall participation in a class covering financial topics. Without formal instruction, many are left to learn from their parents, or on their own by experience. This statement is consistent with this current research where approximately 76% of the students surveyed had learned about money management from family or through their own personal experiences. Congress passed the Excellence in Economic Education Act in 2001, which provided for increased funding of programs in financial literacy (Borja, 2004). In May 2002, President Bush created the Office of Financial Education. Their goal is to educate Americans with practical skills they will need to make better-informed financial decisions (US Treasury).

The JumpStart Coalition for Personal Financial Literacy has published National Standards in Personal Finance covering four areas: (a) Income; (b) money management; (c) spending and credit; and (d) saving and investing (Mandell, 2002). In addition, The United States Treasury’s Office of Financial Education has created eight key elements to a successful financial education program. These eight elements are grouped into four main categories: content, delivery, impact, and sustainability. They present that the areas of savings, credit management, home ownership, and retirement planning should be covered (US Treasury, 2004). Several of these topics were incorporated into a class on financial literacy for offenders.

Objectives and Purpose

The purpose of this study was to uncover some of the financial experiences today’s offenders have faced and identify areas where offenders were lacking knowledge in money management. The next objective was to use this information to teach personal money management topics that met individual offender’s educational needs. The overall goal in teaching this new class In financial literacy was to better prepare the offender to live successfully upon release from prison. The action research question became: What impact does the Integration of the financial history of offenders into a newly created class in financial literacy have on their knowledge and understanding of money management skills?

The test data was analyzed by using Microsoft Excel spreadsheets to see which test questions were missed most frequently. A Microsoft Access database was created to analyze the other student data. By using this program, student characteristics could be combined and printed in useful and informational reports such as offender age and education level, or number in their household and their housing history. Daily student comments were kept by the teacher within a journal throughout the class.

Findings

Financial History of Today’s Offenders

The tools used in compiling the personal financial experiences of today’s offenders included the survey of past financial experiences, interviews and comments during in-class discussions. The data were used to create tables and queries using Microsoft Access. The following data are significant as they present financial characteristics that can attributed to offenders at any location.

Financial problems

When asked about their previous financial problems, a few students claimed that they did not have any. Other offenders shared that they found it difficult to keep up with paying bills at times. Not budgeting, not saving, and spending cash too quickly were also factors that contributed to financial difficulties for the class participants. Their responses showed that most offenders had some financial difficulties at some point.

The amount of debt experienced by the offenders varied quite a bit. Six offenders claimed that they had neither current debt nor savings. Seven offenders claimed to have more debt than savings, with debts ranging from $200 to $20,000. Four of the offenders listed that they had more in savings than they had in debt. These saved amounts ranged from approximately $200 to $20,000. One offender claimed his amount of debt was equal to his savings. The majority of offenders involved in this study held a zero or negative balance in savings.

The offenders shared the sources of their debts. Two of the offenders mentioned owing court fees and three offenders still had restitution to pay. Four of the offenders owed for unpaid child support. Medical bills comprised much of the debt for three offenders, other miscellaneous sources of debt were unpaid bills such as rent, traffic tickets, cell phone bills, bank loans, and money owed to the IRS. One student mentioned that he had worked with a collection agency to get some of his bills paid off. The presence of even a small amount of debt may constitute a large hurdle for many offenders upon release.

Banking

Five of the offenders never had a bank account. Of the remaining students, twelve had some form of a savings or checking account. The majority of offenders in this class had never taken out a bank loan. Only four of the seventeen men had previous experiences with a loan from a financial institution. Those same four students were also the only ones who had a credit card in the past.

Retirement

Of the seventeen offenders in this study, only two of them had begun to save for retirement. This included both retirement savings of their own accord or those established through an employer. In other words, fifteen men from the ages of 20 to 49 had not yet begun to put aside anything for retirement.

Analysis of the test showed student scores dropped slightly on the budgeting questions. The students showed only marginal Increased knowledge with the questions on saving and housing. To conclude, these areas could have used further review. The classes showed moderate improvement through testing in the topics of insurance, credit cards, credit, interest and payroll. The students scored noticeably higher with the questions on retirement, cars, trouble, and privacy.

Integrating Financial Experiences to Foster learning About Money Management

After collecting Information on the financial experiences of offenders via the survey and interview, those experiences were then incorporated Into daily class activities. There are two main ways that this was done. The first was to teach directly to some of their deficiencies in experience. Credit cards and retirement are examples of topics that were covered as few of the offenders had prior knowledge or experience with them.

Second, the offenders assisted in the effectiveness of the class as they shared their own personal experiences through classroom discussions. By incorporating actual student experiences the students learned from each other. The following paragraphs will explain some of the lessons covered and also some of the personal comments that were shared by the offenders in class. This type of instruction gives a real-life perspective to the topics covered.

The lessons on insurance began with the students viewing a video on insurance risk and working through additional activities. One student shared that his apartment had burned In the past and without a renter’s insurance policy he lost $7,000 worth of property.

In the unit on credit cards the students discussed personal experiences in class and also worked out interest fees mathematically on a worksheet. Several showed surprise at the high cost of Interest to be paid when making only the minimum balance payment. One offender remarked, “I ain’t never going to have a credit card, I’m always going to pay cash” (personal communication, June 9, 2005).

During a discussion about loans and banking one student shared an experience where he had co-signed for an automobile loan for a friend. A few months later the car was totaled in an accident. There was no insurance on that vehicle but the loan was still there to pay.

During the discussion on savings options one offender shared his experience with collectibles. He had a collection of miniature cars that had doubled in value over time. A mini-unit on the stock market was also incorporated into this financial literacy class. The students showed skepticism throughout their remarks about Investing their money into the stock market. They shared that they were not willing to risk losing what they had worked hard to earn.