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Personal Finance

How Happy is your Money?


There are two kinds of money: Happy Money and Unhappy Money. What kind is yours?

That’s the abstract question author Ken Honda starts his book Happy Money with. The book focuses on “Money EQ” over Money IQ. Whether you have a lot of it or feel you don’t have enough, this book has a surprising amount of food for thought. It asks many fascinating and uncomfortable questions. The answers can help unearth your individual core beliefs about money, where they come from, and how they might be due for a refresh so you can be financially free.

How Happy is your Money?

What follows are just some of the highlights, which quote liberally from the book, with a fair bit of paraphrasing.

Happy and Unhappy money

Unhappy money is money you use begrudgingly to pay bills, taxes, rent, etc. Unhappy money is the salary you earn doing a job you don’t like but think you can’t leave. Money circulated in frustration, anger, sadness, and despair is Unhappy Money.

Happy money, however, is money circulated with love, care, and friendship. You are willingly helping a friend or relative, investing in a project or buying from a business you love and receiving money for high-quality work from satisfied clients.

It is not how much you make or have that makes money Happy or Unhappy; it is the energy with which your money is given and received. Unfortunately, most people, even the wealthy, are in a deeply committed, unhappy relationship with money.

And like unhappy relationships, most of us spend much of our precious time worrying about and resent money. Some find it so difficult that they don’t even want to think about money.

What does money mean to you?

What if money is a game? How well do you play now? Would you consider yourself to be winning?

Winning (at money) is not how well you do financially. It is how good you feel about playing.

When it comes to money, what, if anything, is in your control? How we feel about money is what we can control. And that has more to do with our feeling about being wealthy than any real estate, stock, gold, or cryptocurrency in our portfolio.

What most people feel about money is that it is scarce. The scarcity mindset is a belief that there are limited resources in the world, and if we don’t get what we want when we want it, someone else will. We have to get it soon because it’s running out. And if it’s running out, we must do everything to ensure we have it before anyone else does.

It usually stems from experiences in childhood. You were denied something you wanted: a trip, a board game, a treat.

The scarcity mindset shows itself when we scramble out of our aeroplane seats and open the overhead bins even as the plane is still taxiing to the gate. “If I don’t get out of the plane quickly, other people will, and that’s bad.”

There’s an easy test to see if you have a scarcity belief: If you picture money as a person, who would it be? Would that person be gentle, kind and fun? Or would he be mean and unfriendly?

Eliminating this core belief of scarcity, that there isn’t enough, and I won’t get enough if I don’t fret and obsess about it, is a prerequisite to being good with money.

Much of our stress, anxiety, and unhappiness about money comes from thinking about our past mistakes or wrongs done to us and needlessly worrying about all the uncertainty of the future.

The common thread between people with a good relationship with money, which includes people with a lot, and people with only enough to make ends meet is that they aren’t afraid of money. Money doesn’t control or have power over them; they have power over it.

Money EQ

If Money IQ is about understanding rational concepts like the time-value of money, compounding, asset classes, costs and taxes, then Money EQ is the emotional intelligence required to deal with your reactions toward money.

You need both for a Happy Money life, more EQ than IQ, you could argue. Most money mistakes are mistakes of emotion made by intelligent people

Core Money EQ principles:

  • Receiving money: Allowing yourself the freedom to receive and knowing that you have inherent value that is worthy of receiving good things
  • Enjoying money: To experience abundance, to stop and smell the proverbial roses while enjoying life and Wealth
  • Trusting the money flow: being confident in your abilities to keep money flowing or restart it if it has slowed or stopped
  • Sharing:  to be generous with your time, talents, and also money

Knowing your Money Personality

Ken speaks of three mutually exclusive categories of people: those indifferent to money, those who actively avoid money, and those who actively engage with money.

Within the last type, the sub-types are the hoarder, the spender, and the moneymaker. There can be combinations of these sub-types to give us eight money personality types.

Eight Money personality types

The Hippie

  • Thinks money is a bad thing and so actively avoids it
  • Will give away money they find to charity to avoid dealing with it

The Indifferent-to-money type

  • Characteristically happy. Barely realizes that money exists
  • Days can pass by without spending or giving much thought to money, so they tend to be well off
  • Will leave managing finances to their spouse, to the point of being unsure of how much they even have or where important financial documents are
  • Were financially comfortable as children and didn’t give money much thought
  • Found among professors, teachers, public servants, researchers, artists

The indifferent-to-money type can get in trouble if the person managing finances leaves or passes away.

The compulsive saver (stockpiler)

  • Their favourite hobby is saving money. Tend to be experts on bargain shopping, can give excellent advice on which phone company is the cheapest, which credit card offers the best monetary rewards when to buy plane tickets to get the best price.
  • Views enjoying luxuries as a mortal enemy of life.
  • Usually comes from bad memories and fears about money from childhood – family business went bankrupt, parents struggled to earn enough money.
  • Many compulsive savers are so afraid of running out of money they will go their entire lives without spending any of their money.

Compulsive savers need to confront anxieties or fears about money and look deeper into what developed them in the first place because no matter how much they save, it will never erase the unease about money that motivates holding on so tightly

The compulsive spender (spendthrift)

  • Loves spending money. Makes people have the time of their life. Embraces YOLO
  • Usually, friendly, outgoing personalities love gifting or treating people for no reason. Feel a sense of pride that their spending is good for the economy
  • Feel a sense of control when purchasing something: enjoy the recognition and courtesy from store staff when making a purchase; give a sense of self-respect.
  • Can have a low sense of self-esteem and constantly feel they are suffocating
  • Most often were raised by compulsive savers.

Compulsive spenders need to examine the cause of why spending feels good, how long that feeling lasts to become more deliberate about their spending, and whether they are jeopardising their long-term priorities.

The compulsive moneymaker

  • Believes life works best when they’re earning as much money as possible
  • Spends the majority of their energy on improving their ability to make money
  • Focuses on work efficiency, time management, gaining business skills over spending time with friends and family
  • Lives off approval and recognition from others for their financial success

Compulsive moneymakers need to examine their lives and measure the true cost, whether physical and mental health and relationships of being single-minded in their pursuit of money.

The Saver-Splurger

  • Regimented and serious, but sometimes feel compelled to use their money, often poorly.
  • Uses savings poorly on things they don’t need or won’t use
  • Feel remorse which leads to strengthening the urge to save

The Gambler

  • Combination of compulsive moneymaker and spender
  • Likes excitement and seeks thrills
  • Finds the thrill of risk and promise of reward is a pleasure unto itself
  • Gets excited by commodity trading and venture capital and sees monotony of consistency as a type of death. Always looking for the next “shiny new thing.”
  • Sometimes raised by compulsive saver type parents

The Worrier

  • Always worried about money, regardless of how much
  • Does not trust life, expects future to be fraught with problems
  • Lacks confidence in potential as human beings
  • Even when well off, worry about something happening to wipe them out
  • Fears about life in general projected onto money

How Happy is your Money?

Five steps to Happy Money

The goal: To feel that you have enough. That you are grateful for everything you do have and that you feel you can give some away.

  1. Shift out of the scarcity mindset: Do you use money, or does money use you?
    • If you don’t gain awareness about how much money influences and controls your current lifestyle and decisions, breaking free from money’s grip on you is impossible.
    • To be free of money worries, you may need to dig into your past relationship with money and examine your early traumas. What are your fears? How and why does money control you? What have you been brainwashed to believe?
    • What emotion does money provoke in you? Anxiety & Fear? Anger & Resentment? Sadness & Sorrow? Hatred & Desperation? Superiority & Inferiority? Guilt & Shame? Numbness? OR Excitement & Joy? Appreciation & Love? Happiness?
      • When was the last time you were excited about money? What if you allowed yourself t feel the joy of receiving and spending money, you would likely invite more into your life.
  2. Forgive and heal your money wounds: How has your relationship with money been since you were young? Is it a happy one or a frustrated one? When you think of the past, does that give you pleasant feelings or make you feel tense?
    • The beliefs created in our childhoods are usually hidden deep within our psyches. They influence how we deal with money at the most basic level. When we earn and spend money, we do it based on rules that may not make much sense. Nevertheless, we abide by these subconscious rules because we don’t know how to operate any other way. And we do it at our peril.
    • Forgive and heal your money wounds: Forgive others and yourself for past money mistakes. When we make peace with the past, those wounds cease to be an obstacle to our present happiness, and money stops feeling like a mysterious, uncontrollable force.
  3. Don’t compare; trust life: Choose what makes you feel like a winner: a job you love (it can be the job you already have) or switching careers to match your abilities and talents better. Or perhaps money isn’t your only yardstick for “winning”. Instead, it is more time to spend with friends and family, or more flexibility to pursue hobbies and interests or do whatever brings you happiness and joy. Ask yourself, what excites me? What do I do well? Life gets easier when you trust in yourself and those around you. Trust and Fear cannot coexist. Trust makes us more active, creative and free.
  4. Look at Wealth as ‘Stock’ and ‘Flow’: Stock, in this context, is assets or net worth, and Flow is income net of outflows. A happy money life requires a healthy mix of both, akin to a lake fed by a stream of fresh-flowing water. Only stock and no flow mean a  stagnant pool. Hence, even people who inherit a lot of money need a purpose and direction that generates Flow.
  5. Find the right tribe: To find the right Flow, find the right tribe. The group of people you resonate with. They appreciate what you do and who you are. They will support you, keep you uplifted, and root for your success. True security does not lie in how much money you have but in who you know and trust.

Once you look back, you can rewrite your money blueprint to take you where you want to go and choose which beliefs to keep and which to throw away because they no longer serve you.

Finally, take every opportunity to show your gratitude. Say thank you when money comes in, and say thank you again when it goes out.

Say arigato (thank you) all the time. Thank you for reading.

Read Happy Money: The Japanese art of making peace with your money by Ken Honda.


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