What Irish monks from the 7th century can teach us about Financial Modelling

Financial Modelling wisdom comes from the strangest places.

Image credit: https://commons.wikimedia.org/w/index.php?curid=15074137

Does this look familiar?

The thing it reminds me of most is long formulas in Excel.

It's a Latin text from the 4th century. It was common then to write text continuously, without any spaces.

In the 7th century, some Irish monks had a lightbulb moment and came up with an innovation that has shaped all modern written language.

They inserted spaces in between the words.

It'snotthatwordswrittenwithoutspacesorpunctuationisimpossibletoread. itsjustmuchharderthanwhenspacesareused.

We apply the same cutting edge innovation in our Excel models. It's a simple thing - but it makes a huge difference.

= IF( AND( J12 > $F10, J12 <= $F11), 1, 0) is easier to read than:

= IF(AND(J12>$F10,J12<=$F11),1,0)

Your brain just likes it better.

Adding spaces in your formulas is a muscle memory thing. (Remember the four stages of learning from earlier). It's a habit. Once you are into it, you'll no longer notice you are doing it.

So here's the mantra.

Models are made up of formulas.

A big part of making models easy to read is making formulas easy to read.

To make formulas easier to read keep them short, avoid off-sheet references, use spaces.


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