About £80m a year could be saved by providing better support for young offenders leaving jail, a report says.
The report calls for help with accommodation and employment
Research by the resettlement project Reset and charity Rainer argues that providing housing and training cuts further crime so it is cost-effective.
Kevin Wood from Reset said: "Too many young people are being set up to fail on release."
The Youth Justice Board, which runs the system, agreed improving resettlement could save money and cut crime.
Reset, a pilot project which ended in June, and young people's charity Rainer argued that pressure on youth offending teams and the prison system resulted in young people being released some distance from their home communities, often without an effective resettlement plan in place.
Their study said better resettlement could lead to a saving of £12,333 for each of the 6,500 15 to 17-year-olds leaving custody each year.
It said 67% of the savings would come from reduced prison spending, 27% from lower crime rates and 6% from the reduced use of emergency accommodation on release.
Mr Wood said: "We have seen examples of young people simply being given a travel warrant and dropped off at the nearest train station after they walk out the prison gates.
"Others are left with no means of financial survival because of delays in benefits claims and around 15% of young offenders are homeless on release from custody."
He added: "The Youth Justice Board have a good strategy and set of ideas that could be quickly put in place - it just needs the backing from the Treasury, the Ministry of Justice and the Department for Children, Schools and Families."