How to actually get good at financial modeling

Most candidates spend more time researching how to learn financial modeling than they spend actually modeling. This is the practical version — what to build, how to structure the reps, and how to know when you're ready.

1. The trap: buying courses instead of modeling

Financial modeling courses are a $500–$3,000 industry built on the gap between "I need to know how to model" and "I don't know where to start." The courses fill that gap, but they fill it badly — you watch someone else build a model for 40 hours and come away thinking you've learned it.

You haven't. You've learned to recognize modeling. That's not the same thing as being able to do it under pressure in an interview room.

The diagnostic: close the tutorial, open a blank sheet, and build the model from memory. If you can't, you haven't learned it yet — you've only watched it.

This isn't a knock on courses as a starting point. It's a warning that watching is not practicing. Every hour past the first few tutorials should be reps, not more watching.

2. The 4 models that show up in 90% of interviews

You don't need to know every model. You need to know these four cold:

LBO model — the core PE interview model. Entry EV, debt schedule, FCF sweep, exit equity, IRR and MOIC. If you're recruiting for buyout, this is the one.
DCF — discounted cash flow. Revenue build, EBIT, D&A, capex, working capital, terminal value, WACC. Used in IB and public equity. Know how to defend your discount rate and terminal growth rate.
Merger model / accretion-dilution — combines two companies' income statements. Tests whether a deal is EPS accretive or dilutive. Required for IB interviews; sometimes asked in PE.
3-statement model — income statement → balance sheet → cash flow statement, all linked. Less often tested as a standalone, but it's the foundation under every other model. If your balance sheet doesn't balance, something is wrong.

Prioritize based on what you're recruiting for. PE recruiting → start with LBO. IB recruiting → start with 3-statement and DCF, add merger model second.

3. How to structure practice sessions

Thirty-minute sessions work better than marathon builds. Here's the format that produces results:

Pick one model and one set of assumptions. Don't change the inputs mid-session — that's a different skill (sensitivity analysis) and it'll distract you from the mechanics.
Build from memory, not a template. Templates let you fill in blanks. Blank sheets force you to know the structure. If you get stuck, write down what you're stuck on, finish the session, then look it up.
Time yourself. A paper LBO should take under 10 minutes. A full LBO model in Excel should take under 45. If it's taking longer, you don't know the structure cold yet.
Debrief before closing. Spend 5 minutes writing down what you got wrong or got stuck on. That list is your next session's warm-up.

4. What to check when you think the model is done

Finishing the build is not the same as having a correct model. Run these checks before you call it done:

Sources = Uses. Total transaction value must equal all sources of funding. If not, something's wrong in the capitalization.
Balance sheet balances. Assets = Liabilities + Equity. In every period. If it doesn't, there's a missing link somewhere.
IRR sanity check. Use the MOIC-to-IRR table: does your IRR match what you'd expect for this MOIC and hold period? A 2x in 5 years should be ~15%. If yours shows 35%, something is wrong.
Debt hits zero before exit. If your model shows negative debt (i.e., the company paid off everything and kept accumulating cash), check whether your FCF sweep is set up correctly or whether the company is unrealistically cash generative.
Sanity-check EBITDA margins. If you're projecting 40% margins on a retail business, you've made an error somewhere. Know the rough margins for the sector you're modeling.

5. Free resources vs paid — an honest comparison

Resource	What it's good for	Cost
FundSim	Interactive LBO, DCF, PE waterfall — no Excel, instant feedback on your inputs	Free
YouTube (Aswath Damodaran)	DCF theory, valuation philosophy — the best free teaching on the fundamentals	Free
Company 10-Ks on SEC EDGAR	Real financial data to build actual models, not toy examples	Free
WSO / Mergers & Inquisitions	Interview guides, example questions, industry context	Free (partial) / Paid
BIWS / Wall Street Prep	Structured video curriculum with Excel templates — useful if you genuinely need scaffolding	$300–$500+

The paid courses are not a scam — they're a reasonable way to get oriented. But most of what makes you good at modeling is reps, not curriculum. You can get the reps for free.

Start with an interactive LBO

FundSim's LBO tab lets you set every input — entry multiple, debt level, EBITDA growth, exit — and see the model rebuild in real time. It's a good first rep before you tackle the same thing in Excel, because you can focus on the logic before you fight the spreadsheet.

Start with an interactive LBO — no Excel required ›

LBO model explained · IRR vs MOIC · LBO interview questions