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.

Sharing an article used for UCC’s Beacon of Change program….

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What to Do With P 100,000: Three Goals to Fulfill Before Investing

If you had P 100,000, what would be the best way to invest it—assuming you have an emergency fund for crisis situations and no debt? How do you ensure your financial well-being?

“You must determine your investment objective,” says Personal Finance coach, Randell Tiongson. “What is your time frame? What is your tolerance for risk? These are some of the questions you have to ask yourself.”

What you do will depend on whether you see yourself as a low-, moderate-, or high-risk investor.  “Whatever your goals are, you have to become a no-nonsense investor.

If you are not too keen on risks such as loss of capital, (in other words, you are a low-risk investor) you could look into time deposits, special deposit accounts, treasury bills, or mutual funds/ Unit Investment Trust Funds (UITFs) that are invested in fixed income securities or bonds.” These investments, Tiongson says, are low-yield investments but they are highly recommended for those who want to play it safe.

For moderate-risk investors, he has this advice: “You can look at mutual funds/ UITFs that have both bonds and stocks in the fund, popularly referred to as ‘Balance Funds’.”

For high-risk investors, Tiongson recommends investments that have higher yields— the stock market or going into business.

It is good to set short-term and long-term goals, says Tiongson. He suggests three financial goals you can set for yourself for 2011. Your first goal, he says, is to aim to have a positive cash flow. “Balance the budget and ensure there is a surplus. Everything starts from here. In simple terms, that means you must earn more money or spend less money. It’s actually best if you do both.”

Secondly, you should set savings goals. Foremost, aim to set up an emergency fund equivalent to at least three months’ worth of monthly expenses. Once this has been set up, set savings goals for your short-, medium-, and long- term needs.  Dedicate yourself to generating the amounts you have set as your savings goal.

Your third goal should be to start building your capability to invest. Tiongson suggests that after an emergency fund has been set aside, one should create a separate investment fund, set up solely for the purpose of investing. “Build on it peso by peso. Wait for good investment opportunities.”

Once you have set your financial goals, you may feel that you do not have the resources or the sufficient know-how to achieve those goals. Tiongson outlines specific steps that you can take to ensure your financial well-being. “Budget well,” he says. “Itemize all your expenses and arrange them according to priority. Knowing what you need to spend on helps your budgeting process. Adjust your budget accordingly to ensure you will have a surplus. Be prepared to cut on spending for your wants (as opposed to spending on your needs).”

Finally, Tiongson says that you should also make sure 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.”

Tiongson wrote “The Twelve Easy Steps to Financial Wellness” as an add-on to the UCC Vision Logbook, available at UCC Coffee Concept stores. Building on the theme “Positive Change and Planning for Change,” the UCC Vision Logbook aims to deliver to loyal UCC customers a blend of motivational and practical information to bring about positive change.

The UCC Vision Logbook was put together by Tiongson, visionary restaurateur and UCC owner Hubert Young, motivational speaker Francis Kong, mind mapping expert Raju Mandhyan, and entrepreneurship advocate, Jay Bernardo, for Let’s Go Foundation.

UCC customers can avail themselves of the basic vision logbook by presenting an accumulated P5,000 in UCC Coffee Concept Store receipts. A customer may claim the logbook by presenting receipts issued within the promo period (December 15, 2010, to February 28, 2011). More add-on modules designed by the Beacons of Change are also available for every P 1,500 single minimum receipt purchase at UCC Coffee Concept Stores within the promo period.