Mottos to keep in mind to sustain grit, during financial modeling
Many of the financial modeling exercises start from a basic 3-statement-model and then develop to become a more complex beast in time according to business requirements.
In most cases, financial modeling brings challenges, especially when your specific modeling problem does not fit into your existing model or cannot be implemented in your technology, Excel & VBA. Sometimes we -as a modeler- are resistant to the idea of adding or removing some part of the calculations to maintain sustainability of our modeling.
Whenever a modeler stuck because of confusion, s/he should give himself a coffee break to refuel his mind and prevent sanity. During that break revisiting “The Modelers’ Hippocratic Oath” will definitely help to go through that blockage.
The Modelers’ Hippocratic Oath
- I will remember that I didn’t make the world, and it doesn’t satisfy my equations.
- Though I will use models boldly to estimate value, I will not be overly impressed by mathematics.
- I will never sacrifice reality for elegance without explaining why I have done so.
- Nor will I give the people who use my model false comfort about its accuracy. Instead, I will make explicit its assumptions and oversights.
- I understand that my work may have enormous effects on society and the economy, many of them beyond my comprehension
Then there comes three paradoxical mottos to loop through as mantras while sipping the caffeine. First one, attributed to Leonardo Da Vinci,
“Simplicity is the ultimate sophistication”.
Then comes the second motto, referred to Albert Einstein,
“Everything should be made as simple as possible, but no simpler”
helps more practically balancing the idealistic world of Da Vinci. This one helps to avoid the oversimplification trap, to keep the model making sense.
Last but not least,
“Perfect is the enemy of good enough” was my mantra to finish each step of modeling when time becomes the most expensive resource. I am thankful to one of my ex-bosses reminding this quote to provide relief, and make me a do-er when things were getting complicated during our modeling exercises.
These are my distilled set of mottos to keep my mind sane. I hope you will also benefit from them.