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Money IQ and Money EQ The Secret to a Great Relationship with Money

Last updated 03/20/2024 by

Ken Honda
When it comes to financial intelligence, there are actually two types: Money IQ and Money EQ. Most of us are only ever taught about Money IQ or the practical accounting, money-making, investing side of money. It’s unfortunate that we’re never really taught about Money EQ — your emotional intelligence about money.
It doesn’t matter how wealthy you are if you have low Money EQ, because although you may have the skills to earn a million dollars overnight, it won’t make you happy, or you will always seem to lose it just as quickly due to what feels like bad luck. But it isn’t bad luck — it’s your emotional pattern.
We need a healthy balance of both Money IQ and Money EQ to be happy and prosperous. High Money EQ allows us to develop a much better relationship — not only with money but also with the people in our lives — and at the end of the day, all of life’s most important chances and opportunities come to us through people we know and meet.

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Money IQ principles

First, let me briefly introduce the four principles of Money IQ. I don’t usually write or speak about these principles in detail because sometimes it seems as if the market is overflowing with teachers and gurus who will show you all the tips and tricks you need to know to get rich but knowing the four most essential principles is a good way to grasp the total picture and give yourself a quick self-assessment.

1. Earning money

Maybe this goes without saying but knowing how to earn money is essential no matter what level you’re at. The core of the issue is that there are different rules at each level, so it feels like someone working a desk job at a company is really in a different world than someone who only earns money through investing or buying and selling companies, for example. It’s impossible to learn all the rules for all the possible levels, so it’s essential that you know where you want to be and what you need to know to earn money well.

2. Spending money

One harsh truth is that many successful people spend money on things that make them more abundant, while others spend money on things that only make them *feel* abundant for a short time. Or in other words, someone who spends wisely has “living” money because it creates more prosperity and more money flow in their lives. Spending money on a wish list of new clothes, cars, or games is not likely to keep the energy of money flowing back to you — the flow of prosperity stops there. It’s a sign of high Money IQ if you’re able to tell the difference between higher investments or simple expenses each time you spend money.

3. Protecting money

Protecting your money is another essential principle of Money IQ because it’s about knowing how to prevent unnecessary loss. If it flows out the door in one of many unexpected ways the next moment after you earn it, you can’t enjoy the wealth you’ve worked hard to create. One mentor of mine taught me that when it comes to learning how to protect your money and investments, there are three types of people: “Smart people learn from others’ mistakes. Ordinary people learn from their own mistakes. Foolish people keep repeating the same mistakes and invite bad fortune.” So, it’s important to understand things like the top reasons money slips away so you can protect your money well without suffering unnecessarily.

4. Increasing money

The fourth principle of Money IQ is increasing or investing your money. Sometimes it seems like the more successful someone is at business, the more likely they are to slip up and make mistakes in investing. One thing that many successful people get right is knowing that investing is more than just stocks and bonds on Wall Street — they know that investing in yourself, in good relationships, and good businesses are all very important ways to invest, too.

Money EQ principles

Money EQ is an assessment of how healthy your emotional relationship with money is. The higher it is, the more happiness and satisfaction you’re likely to feel no matter how much money you earn. That emotional freedom factor is so important in life. Money EQ will add balance to the Money IQ you already have so that you can actually enjoy abundance instead of letting it slip away unappreciated and unnoticed.

1. Receiving money

Receiving money well is an important topic that I could teach about for days. I believe that all wealth begins first and foremost by accepting and allowing it into your life. If it sounds a bit receptive or passive, that’s because it is. We often don’t allow ourselves to receive money well and block it from reaching us, many times without even realizing it. This is because it’s rooted in our very belief system and ideas about our self-worth. Being open to receiving money well sounds simple, but negative beliefs can easily get in the way if we’re not careful.
Sometimes the first step is realizing just how much abundance you’ve already received and appreciating that. When receiving becomes more and more natural, it is tied to a deep gratitude and appreciation that also makes you want to keep giving back. At the end of the day, receiving well is equivalent to giving. I think all of us have had positive experiences where we felt giving our time or energy to someone was very rewarding in and of itself. When you become an expert on receiving well, it creates a cycle of abundance.

2. Enjoy money

Being able to thoroughly appreciate and enjoy the money you have is the second Money EQ principle. When you’re able to appreciate your current circumstances and where you are now, it changes how you see everything. You become able to appreciate even the smallest details from the bottom of your heart. You can enjoy what you have!
This may seem like a strange example, but it’s almost like accepting a compliment well. When someone reaches out to you with genuinely kind words to lift you up, it can almost feel like an insult when we’re trained to reject any compliment and insist on our low self-worth as a form of humility. However, it doesn’t come across as humble in most cases — it just makes the person who complimented you feel awkward at best or even hurts their feelings. The best way to accept a compliment is to humbly but genuinely accept it and say an honest word of appreciation instead. The same thing applies to accepting and enjoying wealth, happiness, joy, and so many good things in life. This is truly a good measurement of emotional intelligence.

3. Trust money

Trusting in money and trusting in the flow of money is another essential principle of Money EQ. This might be one of the most difficult for many people because we’re trained from an early age to believe that there’s a limited amount that can run out. One of my earliest and wisest mentors, Wahei Takeda, taught me his view about the essence of money, which is that money is like a natural flowing fountain of water. “If you trust in that flow, there will always be enough, and it will be there whenever you need it. It will never decrease if you take some from it or if someone takes some from you. It is an infinite source.”
When we feel fear that our money will run out, we start making decisions differently based on those fears instead of thinking more creatively and acting with a deep sense of security. That attitude opens up possibilities that just don’t exist for someone who is only looking at negative outcomes. Seeing the bigger picture and trusting in the flow of money is the opposite of a scarcity-based mindset.

4. Sharing money

Many cultures all over the world have known for hundreds and thousands of years that sharing and spreading wealth and opportunities benefits everyone. Money and wealth really do move in a flowing energy, and if you develop the skills to direct the flow of money going out as well as you direct the flow that’s coming in, you can truly make a deep and lasting impact on other people’s lives.
Sharing money well is a reminder that abundance moves in a flow, so it’s your opportunity to step up and have a say in where it flows to. Giving generously opens up new avenues for you to receive generously as well, which is one of the most abundant ways you can possibly live your life.

The Secret to building a great relationship with money

If understanding the basics of Money IQ and Money EQ (especially Money EQ!) and creating a healthy balance is the first step to creating a good relationship with money, the next step would be to increase your Money IQ and EQ as much as possible throughout your daily life.
Here are five simple ways you can start doing that today:
  1. Become more conscious about the flow of money in your life.
  2. Pay attention to the emotions that come up whenever money flows in and out of your life.
  3. Learn from a good mentor and make some friends who also have good Money IQ and EQ.
  4. Become more sensitive to coincidences and synchronicities that show up, so you don’t let great chances and opportunities pass you by unnoticed.
  5. Forget about money for a moment and focus on doing what brings you joy.

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Remember that we don’t work because we want money, but because we want to enjoy life and hopefully share it with people we love. Creating a positive, healthy relationship with money can help you do more of what you love and let you take more control over your choices in life. Raising your Money EQ is an especially great place to start.

Ken Honda

Money and happiness expert Ken Honda is a best-selling self-development author in Japan, with book sales surpassing eight million copies since 2001. His latest book is called “Happy Money: The Japanese Art of Making Peace with Your Money” (June 4, 2019, Simon & Schuster). Learn more at KenHonda.com.

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