MANILA, Philippines — Millionaires don’t always earn their money overnight; they often get there through hard work and shrewd investment. Many of us don’t mind doing the former, but it’s the latter that stymies most people and sends them to a mentor to know where they can start.

I never tire of speaking on the topic of personal finance, even after 20 years in the financial services industry, which is why I agreed to be tapped by UCC as one of their beacons/speakers for exclusive dialogues in a series called “Beacons of Change: Coffee Collaboration Talks.”

As a financial adviser and the director of the Registered Financial Institute of the Philippines, people have come to me asking what a good investment is, and when to stop throwing good money at bad ones. I usually give 12 simple guidelines. People can put into practice the first three or six steps depending on what financial point in their lives they may be in.

In starting out on the road to financial health, set these three priority goals to achieve in 2011: positive cash flow, savings goals, and building up capacity to invest.

The first step is making more money and/or spending less, in essence achieving positive cash flow. This can be done by increasing ways to get active or passive income, or decreasing expenses (especially after identifying non-essentials that can be deferred or better yet, done without). Positive cash flow involves earning more money or spending less money, although the ideal state is doing both.

Savings goals involve setting up an emergency fund (equivalent to at least three months’ worth of expenses) then other funds for short-, medium- and long-term needs (ex. a new car or vacation abroad, further studies to advance in career or retirement). Building a separate fund for investments will take time, but so will capacity to decide which investments are suitable for the type of investor one is.

There are many important aspects of financial management that money-smart people should know about. In my columns for Business Mirror and Moneysense, I talk about these basics. At the UCC Beacons of Change Coffee Collaboration Talk held last February, I spoke about the first six steps to Financial Wellness: risk mitigation, getting out of personal debt, preparing for retirement, creating an emergency fund, and preparing a financial legacy.

And the next six (preparing for your kids’ education, making money work, avoiding scams, controlling your spending habits, spotting alternative investments, and taking chances) to achieve total financial wellness are available in the UCC Beacons of Change Vision Logbook Financial Wellness module. My website, www.randelltiongson.com, also contains updates and schedules for upcoming talks.

Those who attended the UCC talk told me that it was an eye-opener as they learned things they had previously overlooked or ignored in their quest to financial well-being. Education is an investment not only for one’s children (if any), but also for one to gain an edge in the market or workplace.

I highly recommend building one’s skills and competence, whatever the job or position one holds. Education is an investment. In fact, education could set one apart on the road to earning more money.

Like the parable of the talents in the New Testament, each of us is given something we can use to invest and grow exponentially, rather than hide and bury in the ground. Given P100,000, what can one do with it to make it grow even more? Assuming that the emergency fund is in place and no debt is outstanding, one should determine an investment objective and time frame, as well as assess his or her tolerance for risk.

From there, explore what investment is most suitable: from time deposits or treasury bills (low-risk), to mutual funds that have both bonds and stocks in the fund (medium-risk), to high risk ventures such as the stock market. In the UCC vision logbook, I recommend that beginners should practice with small amounts. Taking risks can be very profitable, but being good at it requires practice.

Whatever financial goals a person has, one has to become a no-nonsense investor, because great investment opportunities can be losing poker games if one does not pay full attention to what is going on. I also caution many people against putting everything they have in a high-yield investment, because one should only take risks when savings and non-risky investments are in place to fall back on.

Following my advice may take some discipline and attention to detail, but if a person believes in making money work for him after all the hard work put into earning it—one can become part of a generation that works not just harder, but smarter.