Let’s be honest, money can be elusive. It may slip out of your hands before you can say “goodbye.” For most of us, spending money is not the problem. It is clinging to it and making it grow that generates the most complaints.

While doing research for my first book, “Cool Things” They Should Teach in School, I interviewed financial planners, investment analysts, and wealthy businessmen. After collecting this information at the ripe age of 17, he was seriously confused. But after writing, reading, and rewriting on the subject, I began to notice a pattern of money management ground rules emerging.

I learned that managing money properly doesn’t have to be an overwhelming process. Those people who are financially free tend to live by five very simple principles.

Rule #1: Take responsibility

One of the biggest myths I see today is that we all deserve a great life filled with nice things, lots of money, and lots of happiness. The truth is, there is only one person in charge of the quality of your life… you!

The first step to becoming financially independent is taking responsibility for your own money. When, where and how do you spend your money? Those questions may seem obvious, but most people are hesitant to answer them. Be aware of your spending habits. All of these rules are related, but you have to realize that your actions determine whether you’re digging for coins on the couch or flying first class to Fiji on vacation.

Rule #2: Pay yourself first

It may seem selfish, but if you don’t pay yourself first, you’ll never be financially well off. This means taking the first ten percent (or more, it’s your future) of what you earn and investing it right away. Remember, never-before-seen money cannot be lost.

My parents introduced this rule to me at a very young age, even though they only paid me a dollar an hour. Today, I thank you because I now have money saved for emergencies and have laid a solid foundation for my future.

Rule #3: Give before receiving

You don’t get a tree unless you plant a seed. And investing requires the same process. You will never get rich unless you plant your money in a worthwhile investment. The more time passes, the more your money will grow. (That’s right, like a tree)

Your dreams will come true as a result of your own responsibility, sacrifices and patience. Over two summers, I sacrificed tons of time that could have been hanging out with friends and going to the beach to finish my book. But giving my time and effort has contributed to achieving the life I want. In other words, we may have to give up some things now, to make things easier (or better) later.

Perhaps Zig Ziglar said it best: “Do the things you need to do when you need to do them, and the day will come when you can do the things you want to do when you want to do them.”

Rule #4: Opportunity cost

Whether you’re shopping for coffee, an expensive outfit, or a car, every choice you make has an opportunity cost. In short, this means that when you make a choice, you are giving up another alternative. Any decision that leaves you with two or more options is an example of opportunity cost. Essentially, we are all facing the same situation… We must choose between “the pleasures of now” or delayed gratification. Every dollar we spend shapes our financial situation. How are your money management decisions contributing to your future?

Rule #5: Make your money work for you

There are two categories in which we spend money.

i) Assets

ii) Liabilities.

To keep things simple, I like to call them money eaters and money makers.

The name gives it away; You don’t want to spend most of your money on liabilities or money eaters (ME) because these things are going to devour your money. Look at these purchases as junk food for your bank account. It is money that you spend on yourself for immediate pleasure, hence the first letter of each word: “ME”. Money eaters are things you buy that lose value once you buy them (music CDs, clothes, stereo equipment, etc.)

On the other hand, you want more of the M&M’s… or the money makers. As the name suggests, these are purchases that allow your money to grow or investments that increase in value. This is what some people refer to as “making your money work for you.” Yeah, it’s definitely a good thing.

Think before you spend. If you spend too much money on “ME” you will never have the freedom you really want. Look for M&M’s and invest in things that will make you more money…not eating it. Don’t just work for money, make your money work for you.

-Kent Healy