MQ: WHY EQ AND IQ MATTER IN FINANCIAL DECISIONS
- Derek Hagen
- 5 days ago
- 3 min read
❝True financial well-being comes when emotional awareness and financial knowledge work in harmony.❞ -Carol Anderson
Knowing what to do with money is only half the story.
The other half is why we do (or don't) follow through.
Most of us already have a good understanding of money. Spend less than you earn. Save for the future. Pay down debt. On paper, it’s straightforward.
But if knowledge alone were enough, we’d all follow through perfectly. The truth is: knowing what to do and actually doing it are two very different things.
If you're interested in values-based financial planning, here's how to work with a Money Quotient-trained financial life planner.
That’s where emotional intelligence (EQ) comes in.
Financial well-being isn’t just about financial knowledge (IQ). It’s about the relationship you have with money and how well you understand your own emotions. When you combine IQ and EQ, you get your MQ: Money Quotient, a measure of true financial well-being.
THE FINANCIAL WELL-BEING FORMULA
The MQ formula shows how knowledge and emotions work together:
IQ (Financial Literacy): Understanding the facts—budgets, investments, insurance, debt, planning.
EQ (Emotional Awareness): Understanding your relationship with money, your habits, your triggers, and your values.
MQ (Financial Well-Being): Where the two come together.
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The Value Compass is designed to help you gain insight into your own values and how they guide your thoughts, feelings, and actions. It can be used to explore your personal goals and motivations, as well as to gain a better understanding of others' values and how they may differ from your own. |
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WHEN ONE SIDE OUTWEIGHS THE OTHER
The formula also explains why so many of us struggle, even when we “know better.”
Analysis Paralysis: High IQ but low EQ. You know all the strategies, but emotions get in the way; fear, anxiety, or overthinking stop you from acting.
Good Intentions, No Roadmap: High EQ but low IQ. You’re in tune with your emotions, values, and goals, but without practical tools or knowledge, it’s hard to make progress.
Stuck: Low in both EQ and IQ. This is where many people start: overwhelmed, avoiding money decisions, unsure where to begin. The good news is that both are skills you can build.
Financial Well-Being: High in both EQ and IQ. This is the sweet spot: your financial knowledge is strong, and your emotional awareness helps you actually follow through.
THE GOOD NEWS: BOTH ARE TRAINABLE
Neither IQ nor EQ is fixed. Both can grow with practice:
Build IQ by learning the basics of personal finance—budgeting, saving, investing, and protecting what you have.
Build EQ by paying attention to your emotions around money. Notice when fear, guilt, or excitement shows up. Name what you’re feeling because if you can name it, you can tame it.
The more you grow both, the stronger your MQ becomes. And with a higher MQ, you’re not just smarter about money—you’re better at living in alignment with what matters most.
You get one life; live intentionally.
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REFERENCES AND INFLUENCES
Ariely, Dan: Predictably Irrational
Budd, Chris: The Financial Wellbeing Book
Feldman Barrett, Lisa: How Emotions Are Made
Klontz, Brad, Rick Kahler & Ted Klontz: Facilitating Financial Health
Klontz, Brad & Ted Klontz: Mind Over Money
Miller, William: Listening Well
Miller, William & Stephen Rollnick: Motivational Interviewing
Newcomb, Sarah: Loaded
Rosenberg, Marshall: Nonviolent Communication
Sinek, Simon: Start With Why
Sofer, Oren Jay: Say What You Mean
Wagner, Richard: Financial Planning 3.0
