Why should I learn financial modeling?

Financial modeling is an in-demand skill that helps businesses and investors make better-informed financial decisions. You can apply this skill to your personal investments or use it to pursue a career in finance. Many companies in various industries hire candidates with financial modeling knowledge, including healthcare companies, tech companies, investment banks, and insurance companies.

How long does it take to learn financial modeling?

Learning a particular financial model may take a few weeks to a few months to learn. A complete education in financial modeling may take several years to fully understand each model and its applications. If you’re looking to complete the bachelor’s degree prerequisite needed for most financial modeling jobs, it will take you about four years of full-time study.

How hard is it to learn financial modeling?

Financial modeling requires a strong understanding of financial concepts, the ability to read and interpret financial documents, and knowledge of how and when to use certain models. Unless you have a deep understanding of corporate finance and accounting, you may find financial modeling relatively challenging to learn.

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What is financial modeling?

Financial modeling refers to the process of using existing data to predict the future success of a company or financial decision. By assessing available data from balance sheets, income statements, past performance, and industry trends, you can build a model that predicts future outcomes. Companies and investors use these strategies to make educated predictions that drive decision-making.

Financial modeling skills may be applicable to a whole host of different jobs. Examples include investment banking analyst, equity research analyst, financial analyst, and financial planner.

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Choosing the right financial modeling program for you

When considering a financial modeling program, it's important to select one that teaches the financial model you're most interested in learning. Some of the more well-known financial models taught include the three-statement model, the merger (M&A) model, the initial public offering (IPO) model, and the discounted cash flow (DCF) model. If you're unsure which model you want to focus on, choosing a more broad option can be a great first step.

Here are several learning options to consider:

Courses

Financial modeling courses can serve as either great introductory options or ways to laser focus on a particular model you want to learn.

Certifications

Earning a certification in financial modeling helps ensure you've learned all the essentials you need to know about a particular model or concept. This can also provide concrete proof of your skills, experience, and expertise in a particular area to a prospective employer, helping you stand out in a crowded job market.

Executive education programs

If you're an industry veteran looking to enhance your skills or advance your career, executive education programs can provide a schedule-sensitive way to learn financial modeling.

Degrees

With a bachelor's degree in finance, you ensure that you're getting a well-rounded education that can support financial modeling knowledge.

Additionally, a significant portion of jobs require at least a bachelor's degree in finance or a related field. So despite the significantly larger amount of work required to complete a four-year program, earning your bachelor's degree can often be a wise investment in your career.

Jobs in financial modeling

Many industries use financial modeling, including banking, credit rating, insurance, healthcare, and accounting. Within these industries, many jobs exist, such as financial analyst, equity research analyst, corporate banker, asset manager, and investment banker.

Typically, these jobs take place in an office environment, working for a company that uses the financial models internally or a company that works as a third-party creating models for other organizations.

One of the best ways to improve your skill set in financial modeling and position yourself for more attractive jobs is to learn additional types of financial models. These may include the leverage buyout (LBO) model, the consolidation model, and the sum-of-the-parts (SOTP) model.

Here are a few positions that may be available to professionals with knowledge and experience of financial models, with each role's required education as well as salary data from the Bureau of Labor Statistics (BLS):