Millionaires don’t always earn their money overnight; they often get there via hard work and shrewd investment. Many of us don’t mind doing the former, but it’s the latter that often stymies those who need a little chat from a mentor to know where they can start.

As a financial adviser and the director of the Registered Financial Institute of the Philippines, people have come to me asking what’s a good investment, and when to stop throwing good money after bad. I usually give twelve simple guidelines, and people can put into practice the first three or six steps depending at what financial point in their lives they may be when starting out. If you’re just starting out on the road to financial health, set these three goals to achieve in 2011: positive cash flow, savings goals, and building your capacity to invest.

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 key speakers or beacons for exclusive dialogues in a series called “Beacons of Change: Coffee Collaboration.”

The first step is making more money and/or spending less, in essence achieving positive cash flow. You can do this by increasing the ways you get active or passive income, or decreasing your expenses (especially after you identify non-essentials you can defer to another date or do without). Positive cash flow involves earning more money or spending less money, although the ideal state is doing both.

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

There are many important aspects of financial management that money-smart people should learn or know about. In my columns for Business Mirror and Moneysense, I have talked about these basics and you can always hear that from me in my live seminars.

Those who attended my previous talks 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 your children (if you have any), but also for yourself to gain an edge in the market or workplace. I advise you pay close attention to building your skills, whatever the job or position you hold. Education is an investment. Build on your competence. In fact, education could be what sets you on the road to earning more money.

Like the parable of the talents in the New Testament (Matthew 25:14-30), each of us is given something we can use to invest and grow exponentially, rather than hide and bury it in the ground. So if you have Php 100,000 what can you do with it to make it grow even more? Assuming that you already have an emergency fund and no debt, you should determine your investment objective and time frame as well as assess your tolerance for risk. From there, you can explore what investment works best for you, 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 your goals are, you have 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 you already have savings and non-risky investments to fall back on.

Following my advice may take some discipline and attention to detail, but if one believes in making money work for you, after all the hard work you put into earning it—you’ll be part of a generation that’s working smarter, not just harder.