#### To create a formula:

In our example below, we'll use a simple formula and cell references to calculate a budget.

- Select the
**cell** that will contain the formula. In our example, we'll select cell **B3**.Selecting cell B3 - Type the
**equals sign (=)**. Notice how it appears in both the **cell** and the **formula** **bar**.Entering the = sign

- Type the
**cell ****address** of the cell you want to reference first in the formula: cell **B1** in our example. A **blue border** will appear around the referenced cell.Referencing cell B1 - Type the
**mathematical operator** you want to use. In our example, we'll type the **addition sign **(**+**). - Type the
**cell address** of the cell you want to reference second in the formula: cell **B2** in our example. A **red border** will appear around the referenced cell.

Referencing cell B2 - Press
**Enter **on your keyboard. The formula will be **calculated**, and the **value** will be displayed in the cell.The complete formula and calculated value

If the result of a formula is too large to be displayed in a cell, it may appear as **pound signs** (#######) instead of a value. This means the column is not wide enough to display the cell content. Simply **increase the column width** to show the cell content.

#### Modifying values with cell references

The true advantage of cell references is that they allow you to **update** **data** in your worksheet without having to rewrite formulas. In the example below, we've modified the value of cell B1 from $1,200 to $1,800. The formula in B3 will automatically recalculate and display the new value in cell B3.

The recalculated cell value

Excel **will not always tell you** if your formula contains an error, so it's up to you to check all of your formulas. To learn how to do this, you can read the Double-Check Your Formulas lesson from our Excel Formulas tutorial.