In Animal Crossing some, but not all items have a certain feng shui color assigned to them. An item's feng shui color may coincide with its actual, physical color, but contrary to popular belief this is not a reliable way to determine feng shui colors. Many items have a feng shui color that is very different from their physical appearance. If you follow feng shui when you arrange items in your house you are supposed to receive better luck in money and in items.

When you enter a room the way you are facing is north, while the way you came in is south. The other compass directions can be figured out easily in relation to these.

If you use feng shui properly you will have better luck in digging up money from the shiny spots, perhaps finding 10,000 bells instead of 1,000. Orange, Green, and Yellow feng shui will help you item collection. Animals will be more likely to give you items and Redd will be more likely to carry exclusive items in his market.

Items without assigned feng shui colors can be placed anywhere. Areas of the room that are left blank do not give feng shui benefits for any specific color placements. To determine the feng shui colors of various items you can consult the master item list. Special feng shui items contribute to your luck no matter where they are in your house but if you place an object that is listed as having "special" feng shui in a corner you will receive double the usual benefit. Also make sure that any gyroids you have in your house do not face walls.

Feng shui affects your first floor for sure, and possibly your second floor as well. It is unclear at this time whether it also affects your basement. The following diagrams may help you with your feng shui.

Your house at the beginning.

Your house after one expansion.

Your house after two expansions.

How you decorate your house is up to you but the Happy Room Academy will award you with points and prizes if you follow their rules. If you achieve 70,000 points you will get the house model, while 100,000 points will score you the manor model. If you change your layout you will receive a letter, on special wing paper, in your mailbox the next day.

To understand the HRA there are some basic definitions you need to know:
Series: A large group of tradional furnature like pieces. They always have matching wallpaper and carpet. A series includes such items as beds, lamps, and tables.
Themes: A large or medium sized group of related items. They always have matching wallpaper and carpet. A theme includes many different items that are not considered necessary.
Sets: A small group of related items, sometimes as little as two or three pieces. They don't have any official matching wallpaper or carpet.
Necessities of Life: bed, table, chair, wardrobe, dressor OR bureau

The HRA wants to see you put themes and series on the first floor of your house only. If you mix in items from other themes and series on your first floor you will lose 4000 points per item that "doesn't go". The basement of your house is never rated and can be used to store anything you want. Sets should be presented on your second floor only. If your items are not usuable (facing a wall or blocked) you will lose 800 points per item. Any items left scattered on the floor like clothing or tickets, will lose you one point.

Items that are easy to obtain, like those from Tom's shop, generally do not net you a lot of points. Rare event items and those you cannot re-order are worth more points. Some single items, including lucky items, will give you fairly high bonuses as well. You can lose points if you don't leave any room to walk.