How a Chocolatier in London Does Money
Jasmine is a 30-year-old chocolatier in London.
So, Jasmine, tell us a bit about your finances.
Well my current finances are pretty reasonable, although it wasn’t always that way! My job doesn’t pay very well, but it’s a LOT better than this time last year, which in turn was better than the year before that. As of last autumn, I have money to live in a nice flatshare in Zone 2 (that’s quite central, transportwise), buy occasional clothes, and finally pay for drinks for the many people who have paid for mine over the past few years. I’ve got a credit card that I’m using sensibly to build up my credit rating and paying back immediately and I’ve even managed to put a bit back into my (entirely empty) savings account.
But if you’d asked me that question this time last year I would have had a VERY different answer…
What’s changed since last year?
My approach to anything uncomfortable had always been to try and shove it out of my mind and not actually deal with it. Smart, I know. Since starting my business a few years ago I’d been earning not enough to live on and very slowly running down my savings, worrying about if I was going to be able to pay the rent each month. Oddly, something would always come up just in the nick of time to save me on that (some market research, an old temping job would want a day’s work, birthday money). So no savings, no slush fund, nothing.
To top it off, last May I checked my credit rating (it was a work thing, so I COULDN’T put it off) and found that I had a couple of black marks on my record due to misunderstandings I’d chosen to ignore rather than deal with at the time (a phone bill that had been wrongly sent and a £50 bank charge going back six years that had snowballed into £1,500), and no good marks as I had no credit cards or anything.
With the realisation that I couldn’t go on like this dawning, I decided that at the very least I needed to sort out historic stuff. So I bit the bullet and called the phone company and the bank to sort these things out. As it turned out, the phone company were hugely apologetic and sorted it that day(!) and the bank thing ended in me getting compensation as they were the ones who screwed up in the first place.
I also got myself a credit card with a ridiculously high rate of interest, just to give myself some positive attributes and start clawing back points for my credit score. Then I sat down with my colleague and had a serious talk about money and how we were going to live in the long term.
I think that, for me, my financial well-being is pretty closely linked to my mental well-being. So this is definitely better!
Who is your colleague? A person who works at the chocolaterie? (Chocolate shop? What do you call it?) Did you have to change the way you ran your business to improve your own finances?
We just call it the kitchen! My colleague is Juliet, my business partner. We were originally housemates (in 2009). She tends to deal with finance and I’m the more sales and operational side of things.
We had actually made some changes to bring down our costs in relation to our turnover (mostly by not spreading ourselves as thin as we had been), but the talk kind of solidified where we were and enabled us to do a sales push and start growing the wholesale side of the business so it actually supports us. Wholesale is where the money is (selling drinking chocolate to coffee shops)! One day (hopefully soon) we’re going to have a bigger kitchen and retail space combined that we’ll call Jaz & Jul’s Chocolate House.
So what was it like when you started bringing more money in? Did you want to spend it all on luxuries you’d put off for a while, did you feel really stingy about it and worry that you shouldn’t spend any of it?
Also, how did you decide how much to put towards your credit card and how much to put towards savings?
When I started earning more my natural temptation was to go on a spending spree but I tamped that feeling way way down and actually thought about how I wanted to live as I went into my 30s: pretty clothes and living in a hovel with no heating vs. everyday comfort and my existing wardrobe.
The non-hovel side won and I decided that once my then-current house lease was up I’d find myself a nice place to live for a normal price. I was living in a really weird situation for about half regular London rent, and I can tell you more about that if you’re interested.
Credit card: I’ve only been using it for everyday things, just to help myself get a better credit score. Having a direct debit to pay it off immediately means it’s not something that could get out of hand. And it’s good to have the extra protection of a credit card when buying something big (in the UK you get extra legal protection when paying with credit, rather than debit, cards).
Savings: I figured I’d start saving when I could and that the priority for the moment was my ongoing happiness. I did, however, decide that I would buy as many friends as possible as many drinks as possible when the opportunities arose (seriously, I’ve been a total deadbeat the past few years).
YES. I love the day when we are finally able to treat our friends.
Do tell us about that weird living situation! We at The Billfold love hearing about weird living situations.
So I’d been being a property guardian. The idea is that if someone owns a building that’s empty for some reason (e.g. a school that’s closed, a block of flats waiting for council permission to knock down) and they don’t want squatters to move in or vandals to destroy it, they can get people to live in it. You’re not quite a security guard but you have to tell the management company if there’s any damage.
I did it for four(ish) years and lived in: a former halfway house (bullets in the kitchen cupboards), an enormous warehouse in central London with 18 others (amazing fun), the lodge in a cemetery (crazy housemate) and the basement flat below some VERY noisy boys with a lovely actress.
It’s cheap rent, so you get artistic types in general, you do get your own private space, and you can live in some wacky places, but they can kick you out on two weeks’ notice so there’s no long term stability, and they waltz in to do “inspections” whenever they feel like it and claim you have no tenants’ rights. I decided it was time to move on. Much nicer not to wonder if someone’s been snooping in my bedroom every time I come home.
That is incredible. So about how much of your income goes towards rent now?
About half my income currently goes on rent and utilities. My rent is actually very reasonable. When I was househunting I found some awful places for a lot more money. But my housemates are awesome, the flat is nice (we have a balcony) and it’s very well connected for transport.
I’m also curious about your income: do you pay yourself a salary, or do you earn whatever’s “leftover” after your business makes a profit, or…?
We pay ourselves a salary and are trying to be strict about making sure we do actually pay ourselves rather than spending it on events or other business things. This was one of the things we talked about last year. I couldn’t live with the uncertainty of earning “the leftovers.” After all, you can always find something to spend that leftover money on that’s not paying yourself!
This is very true!
What other advice do you have for people who are running a small business, especially re: their personal finances?
Business: Think about the potential return on something before you spend money. You might want that fancy piece of equipment, but do you actually NEED it?
Personal: Don’t forget that, no matter how much you love what you’re doing, it is a JOB. You have to pay yourself properly as you can’t survive on passion alone.
This story is part of our food month series.
Photo credit: Larry Johnson