In our How I Manage My Money series we aim to find out how people in the UK are spending, saving and investing money to meet their costs and achieve their goals.
This week we speak to Katie Cross, 41, who lives in Exeter with her husband, their nine-year-old-son and the family’s pet dog, a four-year-old Border terrier called Rosie. Katie is the co-owner and director of Cake or Death, a vegan bakery in Exeter specialising in letterbox brownies. Katie is a self-confessed spender at heart, but has solid personal financial goals, including saving now to get her son through university when he is older.
Income: I pay myself between £25,000 to £30,000 a year from Cake or Death, so up to £2,500 a month. I have only been paying myself at this level for the last 18 months or so. In the first year of the business opening I earned £8,000.
Outgoings: My husband has a full-time salaried job, and he pays our mortgage and most household bills, including, for instance, our gas and electric bills, which come in at £270 a month, our Sky Broadband and TV, which is £75 a month and council tax, which is £200 a month. My share of our monthly outgoings is generally as follows: Groceries, £480; car and home insurance, £62.50; TV licence, £13.25; our son’s after school clubs and activities, £200; university fund for our son which we put into a savings account, £150; food and insurance for our dog, £30; petrol for the car, £150, but this varies depending on what trips we are taking. My husband and I sometimes share petrol and grocery bills.
My parents are middle-class and earned an average wage when I was growing up. I went to a state school and became the first person in my family to go to university. I studied geography at the University of Oxford and then moved to Paris for two years to learn French. Next, I completed a master’s degree in Arabic and Middle Eastern studies at SOAS University of London.
After finishing my education, I started a career in the non-profit sector. The most important part of my career was spent at PEAS, a charity that builds and runs schools in Africa. In my late 30s I began to think about a career change after spending 15 years in the same sector.
My husband and I thought about setting up a food business for a while and I was already very interested in baking. In 2018 I applied to become a contestant on The Great British Bake Off television series, and despite getting quite far in the process I failed to get on the show.
Afterwards, I had a long conversation with my husband and he said if he could back anyone to start a business, it would be me. So, we decided that I would quit my job and he would support us financially to see if I could make a go of it. I founded Cake or Death in 2019, and later transformed the business from a tiny wholesale cake supplier to one posting thousands of vegan letterbox brownies to customers all over the UK.
The name of my business, Cake or Death, comes from a sketch by Eddie Izzard that has always amused me. I asked Eddie if I could use the name and she said she thought it was a very bad name for a food business! We’ll know if she was right or wrong one day.
I am worried, and at times, flabbergasted, about the impact of rising costs on the business. Our chocolate and sugar costs have gone up by around 20 per cent in recent months and our oil and fat costs have nearly doubled. The cost of cardboard has also increased by 30 per cent in the last year, and energy costs remain high. I have tried to combat rising costs by buying in bulk to access cheaper prices and changing suppliers where possible. But it is inevitable that we will need to raise our prices in the coming months.
Money has become much more important to me as I get older. When I was younger I didn’t mind earning less money than some of my peers but when I had a child and started to get older, my mind turned towards retirement and wanting to be comfortable enough to enjoy that time.
My income from the business is up to £2,500 a month, but this varies. My husband works full-time and he pays the monthly mortgage repayment for our home and most household bills.
At heart I am more of a spender than a saver I’m afraid! I don’t keep a close eye on my finances and love to spend what I like. However, I don’t have very expensive habits other than eating out.
On top of that, I don’t buy clothes often and if I do, I purchase good quality items from a handful of sustainable shops. I often buy reduced products at the supermarket and we rarely throw away food. My husband and I do most of our grocery shopping at Aldi or Sainsbury’s, with the bill now coming in at about £120 a week.
At present, I’m able to save around £150 a month, and this goes straight into an account for our son’s university fund. I have pension pots from previous jobs and I am going to start a new one soon. My husband puts around a third of his wage into a pension every month.
When we moved from London to Devon we purchased a cheaper house than the one we sold, which reduced our mortgage repayments significantly. This means our monthly outgoings are much less than they were in London and we can, fortunately, weather price hikes better than if we were still living in the capital.
My short-term financial goals are to save more, do some renovation work on our house and continue to have enough money spare to take holidays and treats like meals out with friends that we enjoy.
Longer-term, I would like to be able to pay off our small mortgage, which in turn will enable us to retire more comfortably. You never know what is around the corner and I would love to retire by the time I am between 50 to 55 if possible.