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Let's ‘demystify the process’ on teaching kids to spend responsibly: Till Co-Founder

Taylor Burton, Co-Founder of Till, joins Yahoo Finance’s Sibile Marcellus and Alexis Christoforous to discuss educating children to be smarter spenders.

Video Transcript

SIBILE MARCELLUS: $18 billion are given to kids by their parents, mostly in the form of cash, for allowances every single year. But what's also cool, besides getting an allowance, is knowing how to spend that money responsibly. So who has stepped up to do this is the company Till. I want to bring in Taylor Burton. He's the co-founder of Till. And Taylor, tell me about this, about teaching kids how to spend responsibly and also about this new family banking platform that you guys just launched.

TAYLOR BURTON: Yeah, thanks for having me on, Sibile and Alexis. I think that it's interesting you mention $18 billion. That doesn't account for all the money that is not spent directly by the kid today. We've been out to build a platform that respects the family unit as a whole and ultimately creates better economic actors at launch.

I think one of the problems that parents run into when talking about personal finance with their kids is that they're really focused on savings. And that's been a great thing, but the reality is, when a kid turns 18 or 21 and enters the economy, they're not entering a savings economy. They're entering a spending one. So by not having those spending teachable moments happen, we're actually setting our kid up for failure. And that's really why you see about 34% of 18 to 34-year-olds boomerang back home.

ALEXIS CHRISTOFOROUS: So I think we all start learning at home, for better or for worse. So what can we, as parents, do to be good role models when it comes to teaching our kids to spend responsibly?

TAYLOR BURTON: Let's demystify the process, first and foremost. I think that one of the big problems is, is that parents are afraid to have that conversation. When we sit down in living rooms with families and ask them about-- parents about their own financial upbringing, you typically get a story that goes along the lines of, my parents didn't do a great job. I had this XYZ financial blunder. I'd like to do better for my kids. And part of it is just having that conversation. So the dollars that typically a parent would spend on behalf of their kids out front snowplowing, we want to see parents actually shift that spend to the child so that they can pick up that teachable moment and learn something along the way.

SIBILE MARCELLUS: And when it comes to working with these families, do you find that there are some parents who are like, I don't need your platform because I can do it myself? I mean, how do you attract parents to want to be using your platform in teaching these kids these very important lessons about money?

TAYLOR BURTON: Yeah, I think we're great to help start the conversation. But you mentioned something that happens in most families. And ultimately, that's something where you start it, and then you stop it. I think where we come into play is, is, we are a real bank account. This is FDIC insured account. The parent is set up as the fiduciary. The child is the beneficiary.

And this is really going to be their first banking experience. A lot of times, you hear other financial platforms talking about being top of wallet. The wallet doesn't exist when you're 12 or 13. So until you turn 16 and get that ID, you're walking around with one thing, and that's your cell phone. We're ingrained in that experience because we are an app-based featured phone and, as you can see on the screen, a digital and physical card as well. So, really, it's us supporting them on the follow-through side, more than anything.

ALEXIS CHRISTOFOROUS: You know, we often say, you know, women, a lot of the time, make the decisions in the household in terms of buying big ticket items and what they're going to buy. But we can't underestimate the kids, right? I mean, don't they actually have a lot of input in things like, you know, where we're going to vacation and other things that we buy and bring into the household?

TAYLOR BURTON: Yeah, I mean, the reality is, is, kids are helping to pick the make, model, and color of a vehicle. We haven't, for a very long time, respected kids as the financial actors they are. And when they turn 10 to 12 and get that cell phone in their hands, the economy comes rushing in, whether we're ready for it or not. So I think by empowering them, having conversations that help past an agency, we're going to create more financially sound and literate kids that watch.

SIBILE MARCELLUS: I love what you said there. Yeah, when it comes to kids, you know, you think they don't have that much influence until you walk into a place where you can buy a car. And they point out a car, and that's the one that they want for the family.

TAYLOR BURTON: Exactly.

SIBILE MARCELLUS: And often, it does influence parents' decisions. But I want to talk about the competitive landscape when it comes to banking. So where does Till rank when it comes to the giants like JPMorgan Chase, Citigroup, and Wells Fargo? Do you view them as competition or you're doing your own niche thing?

TAYLOR BURTON: Yeah, I think anyone with a banking platform is ultimately competitive. I mean, but the reality is, is, we're really competing, like you guys said early on, with cash. There's been a number of players that have popped up into our space. But none of us are directly competing against each other because the reality is, is, you've got about 50 million kids between eight and 18 that are completely unserved today. Less than 2 and 1/2% of this market has been touched.

So when we're going and we're reaching out to parents, we have a de novo message, right? And I think that a lot of the macro players that you mentioned have largely abandoned and forgotten about this space. They think, hey, you know what? I've got their parents. They're going to come bank with me eventually. I think the rise of the neo banking space, though, has caused them to take notice. You've seen some of them make investments in this space. You've also seen them white label things in this space, JP Morgan specifically. And I think they're waking up to the fact that, to my earlier point, these kids are economic actors. And it's not just pepperoni or cheese type decisions that we're making here.

SIBILE MARCELLUS: Yeah, no, not just pepperoni and cheese type decisions, but those are important, too, when you're having pizza for dinner.

TAYLOR BURTON: [INAUDIBLE].

SIBILE MARCELLUS: Taylor Burton, thanks so much.