What's an annual percentage rate? How do you save for retirement? What's the difference between a stock and a bond? Is it a good idea to put an expensive vacation on your credit card and pay it off over time?
Few Business Journal readers would be baffled by such questions. A large swath of their fellow Americans would be, however: Millions lack the rudiments of financial literacy, researchers say.
In the midstate, many financial institutions are trying to remedy that.
"Everybody has some financial knowledge, but everybody needs additional financial knowledge," said Michael Wishnow, a spokesman for the Pennsylvania Credit Union Association.
Most credit unions "are engaged with financial education in some form," Wishnow said. Credit unions offer programs in 210 of the state's 500 school districts, he said.
In addition, there are 47 credit union branches in Pennsylvania schools, he said. They serve as "laboratories" where students can learn the basics of money.
Midstate banks, likewise, make financial education a big part of their community outreach.
April is Financial Literacy Month, and this past Tuesday was Teach Children to Save Day, an initiative sponsored by the American Bankers Association. This week alone, Metro Bank instructors are reaching 2,700 students in 110 classes, community relations coordinator Keri Kochenour said.
The Swatara Township-based bank offers "Metro Money Sense," a free program for K-12 students, year round, Kochenour said. About 100 trained volunteers from the bank present lessons in school classrooms throughout Metro's market area. Last year, Metro instructors taught more than 250 classes and reached nearly 7,000 young people, she said.
The Pittsburgh-based parent of PNC Bank, PNC Financial Services Group Inc., collaborated with Sesame Workshop, the nonprofit behind Sesame Street, to develop teaching materials geared to children ages 3 to 8, said Christopher Rockey, PNC's vice president of community development banking for Central Pennsylvania.
The result is called "For Me, for You, for Later: First Steps to Spending, Sharing and Saving." The bilingual program kits include a DVD, activity book and teacher/parent guide. In the midstate, PNC underwrites the curriculum's use in the Dauphin and Lancaster county library systems and at the Hanover and York YMCAs, Rockey said.
"It's been very successful," he said.
PNC works with local United Way chapters on various programs for adults, including tax assistance and financial education, he said.
Metro, too, offers adult financial education programs, Kochenour said.
Investor education was part of the Pennsylvania Securities Commission's mission, and it continues now that the commission is part of the Department of Banking and Securities.
Investor education coordinator Tina Kotsalos said she and a colleague make presentations throughout the year to age groups ranging from high schoolers to senior citizens. The outreach has won awards, she said.
"An educated investor is a protected investor," she said.
Americans apparently believe they need more such education. Though 60 percent give themselves high marks for financial knowledge, more than three out of four agree "they could benefit from additional advice and answers to everyday questions from a professional," according to the 2013 Consumer Financial Literacy Survey, prepared by Harris Interactive Inc. for the National Foundation for Credit Counseling and the Network Branded Prepaid Card Association.
Penn State professor Cathy Bowen, whose work focuses on consumer issues, advocates mandating financial education in public schools from kindergarten on.
Requiring a single semester in high school, as some states do, isn't enough, she said. Students need to start forming good habits long before that.
"Starting early in school, I think, is the key," she said.
Pennsylvania "does not mandate any local curriculum" on financial education, Department of Education spokesman Tim Eller said.
However, the state makes teaching materials available to schools and has a Web-based forum where educators can network and share ideas and resources, he said.
Some people believe financial education should be left to families, Bowen noted. But not all parents have the background or skills needed to provide good guidance, she said.
Improving financial education will complement other consumer protection efforts, teaching people to ask the right questions and enabling them to take responsibility, she said.
"It should be a part that receives as much attention as science, math and reading," she said.
A guide for the perplexed
In case you had any trouble answering the questions in the first paragraph of this story, here's a cheat sheet:
1. An annual percentage rate is the yearly cost of a loan, expressed as a percentage of the loan, usually including fees.
2. There are many ways to save for retirement: Counselors recommend making full use of employer plans, saving regularly and moving gradually from more to less risky investments over the course of your working life.
4. Rethink your vacation if you will have to carry credit card debt to pay for it. Credit cards usually carry high interest rates, and in general debt should fund long-term purchases and investments, not discretionary short-term consumption.
Cause for concern
Percentage of Americans who say ...
They don't have a budget: 60
Their households save nothing, on average, for retirement: 31
Their households carry more than $2,500 of credit card debt from month to month: 16
They would give themselves an A or B grade for financial knowledge: 60
Source: "2013 Consumer Financial Literacy Survey," Harris Interactive Inc. Public Relations Research
Source: "Financial Capability in the United States," FINRA Investor Education Foundation and Applied Research & Consulting, 2009