My best tip for learning Financial Modeling?
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Model your own life.
In business modeling there's always a learning curve...
▪️ Manufacturing? gotta learn it
▪️ SaaS? gotta learn that too
▪️ Insurance? you get the idea
With your life (hopefully) there's no learning curve.
So open a spreadsheet...
Put some months along the top.
And some line items down the left side like:
▪️ Paycheck
▪️ Rent
▪️ Utilities
▪️ Groceries
▪️ Travel
▪️ Discretionary (having fun)
Can you fill out something for each month?
🟢 Congrats! You've built a budget.
Now, check it again next month (or next week)...
Are the numbers different than what you guessed?
If so, update them — how did things change?
🟢 Congrats! You've built a rolling forecast.
Now what about cash?
When exactly is Rent due, and when is your Paycheck coming in?
Open another tab, but this time put weeks (or days) on the top.
Put the same line items down the left side.
Put "Beginning Cash" at the top and "Ending Cash" at the bottom.
Punch in exactly when your Paycheck comes in and your bills go out.
Do you have enough cash to cover your costs (in the short term)?
🟢 Congrats! You've built a 13-week cash flow (or 4 weeks, whatever).
Last thing, if you could only open your file for 2 minutes...
What would be the key things you would NEED to see?
▪️ Estimated savings this month?
▪️ Estimated savings this year?
▪️ Maybe a graph of your estimated cash balance?
🟢 Congrats! You've just built a dashboard.
🟢 Best case?
▪️ Better understanding of your personal finances
▪️ Improved Financial Modeling skills
🔴 Worst case?
▪️ Great modeling practice
▪️ Exposure to business concepts understood at a personal level
In fact, I learned most of my Excel skills by doing this.
b/c I didn't need to spend time on the "learning curve."
I just found the fastest way to present info to myself.
And I still use that budget every week.
So — give it a try!
It's some of the best free education you can give yourself.
About Me -- I'm Chris -- I help finance professionals build awesome FP&A and Private Equity Models in a simple and relatable style.
These are the exact models I use with FP&A and Private Equity teams around the world.
Whenever you're ready, you can check them out here.
⭐⭐⭐⭐⭐ "Probably the best course on modeling I have taken."
Until next time.
—Chris