Pages or Word and Excel

Hello to everyone. I just got my first Macbook Pro (Mac anything for that matter). I really like this computer. I'm wanting to put Word and Excel on it but it's $150 and I can get iWork for a lot less. iWork has Pages with it and says it's compatible with Word, Excel and Power Point. I'm really just using it for home and personal use. Can someone explain to me exactly what "compatible" means and which one I should use?

Thank you!

Well I just done what I should've done to begin with. SEARCHED!
Thanks to everyone who makes this a great forum.

Also have a google for libre office

@Berk:

Use the Mac App store to purchase Pages and Numbers for $19.99 each. Don't purchase a copy of iWork as it may be an older copy that is not updated for OS X Lion. The iWork applications are now sold separately from the Mac App store and all have been updated for Lion.

As mentioned, there is also LibreOffice which is free. And a note about MS Office 2011... you can purchase it discounted from several on line retailers. I've seen it for as low as $95.00. Do some more searching.

And welcome to the Mac Forums.

I just downloaded Pages. It seems like it's going to be really easy to use and come with a lot of formats ready to go.

I love Pages.

Numbers as a replacement for Excel, however, I'm less confident about. I think Numbers is an *amazing* re-imagining of what spreadsheets should be, but that really seems to throw a lot of people, particularly those who came to it from Excel where they'd gotten used to the old way.

Numbers also doesn't (and doesn't intend to add, either) some of Excel's more advanced functions. You might think of Numbers as Excel Light for very casual users. It can do all the basic stuff but has much more of a focus on design (in the same sense that Bento has more focus on design than Filemaker).

I created something just to test it out. I put it on a thumb drive and took it work to see if Word would open it and it wouldn't. It's an older version from 04 I believe. What do I need to save it as to open it in Word? My coworker thought I should save it as a .doc. Does that sound correct?

Yes, you have to save the file in .doc format. This is an option available under the export menu item. After that it should work fine.