From Nookipedia, the Animal Crossing wiki
Feng Shui (Pronounced ˌfʌŋˈʃweɪ, "fung-shway") is an old Chinese practice in which furniture and items are arranged in a certain way to increase the flow of positive energy throughout a house. In the Animal Crossing series, the arrangement of items according to its own Feng Shui principles is reported to bring luck with money and items. Feng Shui is applicable only to the first room of the house. Most of the Normal villagers ask the Player about Feng Shui.
Principles of Feng Shui
There are two ways to affect Feng Shui: By placing items of certain colors in their correct areas of the room, and by placing 'lucky' items anywhere in the room.
Every object has two colors which are associated with it. These can be red, orange, yellow, green, blue, pink, colorful, black, white or gray. For Feng Shui, only red, yellow and green are used. If an item has only one main color, then it will be labelled with that color twice. For example, the red armchair is all red. Its colors are 'red/red' or 'red(x2)'.
The key to Feng Shui is matching the color of the items to their appropriate squares in the room. The two rows of squares closest to the west wall are yellow. The two closest to the southern wall are green. Finally, those two which are closest to the east wall are red. In the corners where they overlap, the squares have both colors. As the player pays off mortgage and the room expands, the player can have non-Feng Shui tiles in the middle. Diagrams showing the arrangement of colors in the room can be seen below.
Some items are lucky and bring good Feng Shui no matter where they are placed. Some of these also have colors which are used in Feng Shui and can therefore bring twice as much good luck to the player's house.
Benefits of Feng Shui
Good yellow Feng Shui will bring luck with money, increasing the number of bells given to the player by villagers as rewards for helping them. Bells are also more likely to drop when the player shakes trees.
Good red Feng Shui will bring luck with items. One may find an increased number of items from outside one's furniture group in Tom Nook's store. Items are also more likely to fall when the player shakes trees.
Good green Feng Shui will bring overall luck.