How to Learn Financial Modeling | A Complete Guide

After all these years in the corporate finance domain, I have come across a very frequent question from finance aspirants: “How to learn financial modeling?”

Since an understanding of the financial model is one of the key tasks involved in any finance profile, every aspiring investment banker, financial analyst, or any finance professional, should know how these models work.

In the current age of information and technology, learning these models and their functionality has become much easier than ever before. You have resources available easily to help you learn financial modeling.

I have listed down a few very easy ways of getting to learn financial modeling in Excel.

Why Learn Financial Modeling in Excel?

Microsoft Excel is the main source to learn financial analysis, of any kind. Microsoft Excel offers a complicated yet simple platform to perform financial analysis, such as data mining, making graphic representations, and studying data through various formulas.

The main areas where financial modeling skill is used are:

  • Investment Banking
  • Equity Research and Discounted Cash Flow (DCF) valuation
  • Private Equity
  • Financial statements analysis
  • Cash flow analysis

Deal with Excel while you’re starting out in the financial analysis sector because you are going to be stuck for life! Along with Excel, it is good to also learn about data science.

How to Learn Financial Modeling

How to learn financial modeling

Here are four ways:

#1. Learn by watching tutorial videos

There are a bunch of websites available these days that offer financial modeling skills through free tutorial videos for aspiring finance professionals.

If your understanding of financial models is very basic, tutorial videos are recommended, as you can repeatedly go and watch them if you do not understand anything on the first go.

These tutorial videos are uploaded by experts in the finance field and by various educational institutes. Watching the tutorials gives you practical guidance rather than just theoretical knowledge.

You’re personally guided to perform complex calculations and understand complicated topics. The best thing is that these tutorials can be downloaded or accessed anytime.

Most of these videos on the Internet are free but there are also websites that offer a subscription to these videos at a certain fee.

Either way, watching video tutorials is a recommended way to learn financial modeling in Excel.

#2. Learn by attending virtual classroom training sessions

While tutorial videos teach using the one-on-one mode, virtual classrooms accommodate a lot of students.

There are virtual classrooms wherein you can log in either collectively with peers or individually (depending on the format) to a webinar/remote access platform monitored by a trainer.

The trainers are experts in their field who share knowledge with you in the financial modeling course. These sessions are interactive in nature and also offer an opportunity for peer learning financial modeling.

These sessions offer a deeper understanding when compared to videos, as you can ask questions if you are stuck at any point during the session.

In fact, every participant can ask questions simultaneously; therefore, giving you resourceful knowledge and doubt clarification instantly.

These sessions are conducted by various educational institutions, financial analysts, and online learning portals, usually at a certain price.

But, you can also find these sessions for free as a result of promotional campaigns by these institutes.

Usually, they offer the first module as a freebie, and if you like the training model you can subscribe for the entire course.

The virtual classroom sessions are always recorded for replay. You’re given a download link for 24×7 access.

#3. Learn by practicing and using case studies

This approach is less normative in nature and requires a lot of your time in practicing just like other financial modeling online courses.

Of course, you can’t just watch the tutorials and attend virtual classroom events. You still have to practice what you learn.

As Excel is a very commonly used tool for analysis, there are a plethora of case studies available on the Internet and online financial modeling courses that share knowledge on how to create financial models.

Search for case studies. They usually come with answers.

The solutions are there so that you can compare your work with the actual model in use and understand the difference.

These case studies and practice material like cash flow statement, balance sheet, income statement, and profit and loss statement among other financial data are widely available on the Internet and mostly does not require any subscription.

But, there are paid subscriptions by a few institutions and portals which offer these case studies and also offer a detailed evaluation of your exercise.

A mixture of video tutorials, virtual classrooms, and case study practices will greatly help to improve your knowledge of Excel.

Remember that practice is necessary. Without practice, all the learning won’t be of much use.

#4. Distance learning courses

This is the most result-oriented way of learning real estate financial modeling in Excel. If you want to learn by physically being present in an institute and if you’re already in a job, distance learning courses are recommended.

There are institutes and portals offering these courses over a period of time at a certain fee. Normally, there are no time boundaries because they are aware of you being a working professional.

Even if you aren’t, the distance learning courses offer flexible timings.

Why timings? This is because some distance learning courses offer classroom teaching, ideally during the weekends. They are best used for doubt clearing.

The biggest advantage of taking this course is that typically, at the end of the course, you will be awarded a certificate stating you are a professionally trained professional in financial modeling.

The best way to learn financial modeling is the Breaking Into Wall Street Modeling Course among various others.

I hope this post gives you enough clarity on options in choosing your own method to build financial models using Excel.

Now You Try It

I hope you can see the potential of financial modeling for your career. A career in financial modeling is lucrative.

Financial modeling is a skill and the more you hone it, the better you become.

If you are an expert in financial modeling, you can look forward to a great career in equity research, investment banking, private equity, and financial analysis.

Do not stop the learning curve. Modeling strategies and tactics keep changing. You have to remain ahead of the curve, always.

Yes, it takes hard work to create something great. But, with this skill, you are ahead of the rest of the crowd and your hard work is going to pay off.

If you have a question or thought, leave a comment below and I’ll get right to it.

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