As host of the Retire Sooner podcast and Money Matters radio show, I’ve interviewed many impressive guests. Talented experts from a wide range of fields have graciously shared their wisdom with my listeners and me. To say that I’m grateful for the opportunity to meet some of the best and brightest is an understatement. And yet, even within that rarefied air, I had the opportunity to interview Ken Honda, who stands out as an indelible muse. Here I am on a mission to help improve the lives of retirees, and I stumbled into a discussion that enhanced my own.
A master of money and happiness, Ken is a best-selling self-development author in Japan. His book sales have surpassed eight million copies since 2001, with his latest titled Happy Money: The Japanese Art of Making Peace With Your Money. Ken’s financial prowess comes from owning and managing several businesses, including an accounting company, a management consulting firm, and a venture capital corporation. His writings synthesize finance and self-help, spotlighting personal wealth and happiness through deeper self-honesty.
Happy Money vs. Unhappy Money
His concept of happy vs. unhappy money stayed with me the most from our conversation. He insists it’s crucial to appreciate the money coming in and out of your life. As a financial advisor, I’m trained to find ways for your assets to appreciate, and I may not always be focused on ways for you to appreciate your assets. So it was a foreign concept to me, and that’s why I’ve been thinking about it ever since.
Ken says happy money is money that makes you smile. Unhappy money is money that makes you feel small and contained. If we assign too much meaning to money, we become attached and risk giving it valuable real estate within our identity, sense of security, and self-worth. In short, if you’re emotionally attached to money, it can drive you crazy.
As an example of the emotional stress unhappy money can create, Ken tells the story of an airline survey conducted to measure the volume of complaints. The first airplane had both first-class and coach options. The second plane only had coach. There were more complaints about the plane with first-class because the people in coach assumed special treatment of first-class passengers caused any delays or inconveniences. However, the folks on the second plane were all in it together and viewed inconveniences from this perspective. The unhappiness came not from their financial prowess but from their perception of fairness.
Ken says it is a common mindset in North American culture to associate struggle with unfairness — someone else must be getting a better deal. This feeling of frustration is the same whether you’re making $10,000 or $10 million. It leads to unhappiness. To illustrate, he told me about a friend who feels insecure when he drives into his private jet hangar because the other private jets are fancier than his.
In other words, if you’re looking for something “unfair” in your financial sphere, you’ll probably find it. The key is to instead find peace with money in your own way. How? You have to look inside yourself to find your Zen. Ken assured me the process was simple.
Ken says one of the keys is to appreciate your money. When income arrives, enjoy it with an open heart. If the source of the money is your career, be grateful for it. Of all the people who applied to your position, your boss chose you. If the source of your income is your clients, appreciate that they trust and value your services enough to give you their hard-earned money.
Conversely, when you later spend that money at a restaurant or on your mortgage payment, appreciate all the interactions and communication that had to take place for you to arrive at that transaction. Ken points out that this appreciation only takes one second, costs nothing, and shifts your energy from negative to positive.
I wanted to believe, but it was easier to get there with certain aspects than others. For example, it’s much easier to appreciate paying the check at my favorite sushi restaurant than shelling out four hundred dollars for a speeding ticket. Ken says the trick is to reflect upon where the money will go and how it might benefit you and those in your community. Rather than cursing your bad luck, be grateful that the efforts of the police officers are ultimately making everyone safer. If you can master that, take it another step and thank the officer for reminding you that breaking the law isn’t productive. Before you laugh, Ken actually did this once. It led to a great connection and the police officer tearing up his ticket. I’m not sure that would work in Atlanta, but I take his point.
In the United States, there is a high ambition to make more — more money, more deals and more purchases. It’s part of our DNA. But, is that healthy, I wondered? There are definitely positive elements to it. Pushing for more has led the U.S. to become a world economic leader, brought gold medals to our athletes, and even helped defeat fascism in WWII. Those were all positives. But, my research had also taught me about the Plateau Effect, which showed diminishing marginal happiness per dollar after a certain income.
I wanted to know what Ken thought.
How you feel about it was far more critical than the drive or the amount. Naturally, growing and finding success is healthy. But, if you just want more because of greed and anxiety, that only creates more greed and anxiety.
Ken explained that there are two ways of finding peace and happiness
1. Search outward.
It’s an exciting journey as long as the motivation is pure. Just beware that there’s a never-ending hell for someone who only wants more because of greed. It’s like drinking seawater in a drifting boat. You think it will quench your thirst, but it just worsens things.
2. Look inward.
If you enjoy what you’ve already got, that brings happiness, too. A lot of people who want more forget that they already have enough.
We all have different container sizes when it comes to our finances. Some folks are born wealthy and start with large containers. Others start small. Ken believes you can change the size of your container, but it’s not a good idea to overfill the one you currently have.
How do we know the size we have? Take a step back and think about your budget. Figure out what monthly nut feels comfortable. If you raised that figure, at what point would you start to lose sleep at night? People who don’t mind paying a $10,000 mortgage have a bigger container than those who would struggle to make it work.
The container concept strikes a similar chord to my Rich Ratio — a simple way to measure the amount of money you have in relation to the amount of money you spend. First, calculate your total monthly income net of taxes. Then calculate your monthly needs. Take what your monthly needs are and divide it by what your monthly needs are. If the ratio is greater than one, you appear to be in good shape. If it’s less than one, you have room for improvement.
Ken’s container system isn’t identical, but the spirit of the rule is similar. If you make $10 million yearly but spend most of it, you might be worse off than someone who earns far less. This is because you’re not in tune with the size of your container.
Abundance vs. Scarcity
Scarcity is where you feel like you don’t have enough for your survival or satisfaction. On the other hand, abundance is where you always feel like you have more than enough.
Anxiety creates an illusion that one day your life may fall apart. You have to find peace inside; the key is your connection with people. Ken stresses the importance of invisible assets (trust, friendship, generosity, kindness) rather than just visible assets (stocks, bonds, real estate).
Taboo or Not Taboo? Talking About Money
Talking about money can bring shame and guilt in North American society. Ken says in Asia, financial issues are spoken of more freely, and he believes it helps remove some of the stigmas associated with money. He recommends not being afraid to discuss it with your family members. Not only does it break down barriers with peers, but it can also help children learn more about the value of money.
One time he and his daughter were standing in a long line for ice cream. He lovingly explained that his book sales were helping pay for their ice cream. She asked, “how much money are you making per book sale?” He said, “I make about fifty cents per book.” Concerned, she asked, “Can I still eat my ice cream? It’s four dollars.” It was a teachable and memorable bonding moment for both of them. And yes, they were still able to eat and enjoy the ice cream.
If any of this seems overwhelming, keep in mind that once upon a time, Ken struggled with unhappy money. Both his father and brother are tax accountants, which fostered a family obligation to continue the trend. There was pressure, the feeling that he was “supposed to” follow in his dad’s footsteps. Even when making decent money from the ill-fated pursuit, he wasn’t happy because he knew his true calling was to inspire people. If you find the right fit for you, he says, you almost feel like you aren’t working.
As you head toward retirement, take the time to figure out what your passions are. Find a way to do what you love. It will bring joy and happy money into your life.
This information is provided to you as a resource for informational purposes only and is not to be viewed as investment advice or recommendations. This information is being presented without consideration of the investment objectives, risk tolerance, or financial circumstances of any specific investor and might not be suitable for all investors. This information is not intended to, and should not, form a primary basis for any investment decision that you may make. Always consult your own legal, tax, or investment advisor before making any investment/tax/estate/financial planning considerations or decisions. The views and opinions expressed are for educational purposes only as of the date of production/writing and may change without notice at any time based on numerous factors, such as market or other conditions.