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College planning is an exciting time for you and your child. But, as exciting as it may be, there is a lot of preparation involved.

So, whether your child is entering into their freshman year of high school or a few months away from graduation, there is no better time to start planning than the present.

From figuring out your financials to helping your child prepare for admission exams, this college planning checklist for parents can help streamline your child’s transition from high school to college.

Starting a Savings Plan

College can be expensive. According to the Education Data Initiative, the average cost of college in the U.S. is $36,436 per year, including books, supplies, and daily living expenses. Indeed, the cost of going to college has more than doubled over the past two decades.

As prices continue to soar, it’s easy to become worried about how your child will pay for college or that they will have to take out a crushing amount of student debt in order to pay for the college of their dreams.

With this reality top-of-mind, it’s wise to start saving for your child’s college tuition and fees. But, while many parents may have the best intention of helping their children pay for their college expenses, they often fail to prepare.

So, even if your child is just now entering high school, you can still start saving and preparing for college costs. It’s never too late to start setting money aside for your children’s education.


💡 Quick Tip: You can fund your education with a low-rate, no-fee private student loan that covers all school-certified costs.

Paying Close Attention to Grades and Curriculum

Since grades and curriculum are crucial to getting an acceptance letter, you may want to keep close tabs on your student’s grades and study habits. From helping with studying to supporting homework expectations, getting involved with your kid’s coursework may help them perform better in school.

You may also want to encourage them to take Advanced Placement courses. Since AP courses allow you to tackle college-level material while your child is still in high school, your student may get ahead by taking some.

Also, if your student passes the AP exam at the end of the class, they could be rewarded with college credits. Racking up college credits could save you time and money in the future.

For example, if your child takes AP English in high school, they might be able to skip freshman-level English once they get to the college or university of their choice.

There are fees associated with taking AP exams. Fee reductions may be available for qualified applicants.

Recommended: ACT vs. SAT: Which Do Colleges Prefer?

Encouraging Involvement with the Community

College applications were up sharply for fall 2023, according to data collected by the Common App. With the increase in competition, your child will need to stand out. While the top factors in admission decisions tend to be academics, the next most important factors typically include a student’s demonstrated interest and extracurricular activities.

Encouraging your child to get involved in the community could also potentially help them write a solid college application, and even help them decide what they want to do with the rest of their lives.

For example, if your child loves to run, they may want to try out for the track team to round out their classes or volunteer as a track coach for a youth team. Or, if they prefer journalism instead of sports, they may want to try writing for the school newspaper.

Not only will getting involved help with their college application but it will help sharpen their skills. So, don’t be afraid to encourage them to explore their passions and get involved with the school and/or local community. You might even want to get involved with them.

Planning for the SAT and ACT

Another key component to receiving acceptance letters from colleges and universities is having acceptable SAT and ACT scores. Some schools require the Scholastic Aptitude Test known as the SAT, while others may require the American College Testing, known as the ACT. Some schools will accept either one, but it’s a good idea to check the preference of the schools your child will apply to.

To help your child prepare, you can encourage them to sign up for an after-school prep class or practice at home by using online resources such as Khan Academy’s free SAT practice program in partnership with The College Board.

Recommended: How to Help Your Child with SAT Practice

Researching Schools

One of the most important components of college planning for your child is helping them decide which university or college is the right fit. Fortunately, there are plenty of options available to help you find a school that will fit your child’s education and experience needs.

To get started in the decision-making process you may first want to help your child decide what degree they would like to achieve. If they know they want to be an engineer, you may want to focus on schools with good engineering programs.

Even if you may think their degree is too niche, there is often a program that will support it. Whether they want to study astrobiology or comic art, there is often a program for your child. However, if they are unsure of a major, they may want help finding a school with more program options available.

It’s also wise to consider factors such as location and the type of college experience your child wants to have. For example, if they want to go to a school close to home and commute to save money, that desire will limit the search parameters.

Remember, while you may be the voice of reason, the ultimate decision is up to your child — the student. Simply help them evaluate all of the key factors in making an informed decision.

Scheduling College Visits

College visits can be a big help when it comes to finding the right fit. With this in mind, you may want to help your child plan a college visit well in advance of making a decision. The College Board recommends scheduling your visits during your child’s junior year in the spring if you have already researched schools.

For seniors, it may be best to schedule visits in the fall through the winter months. This may help seniors narrow down their options.

Since you want your child to get a feel of the college experience, you’ll want to make sure classes are in session. Therefore, it’s also wise to avoid visits during holidays or break weeks.


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Investigating Financial Aid Options

Even if you have saved for your child’s education, you may want or need to explore other funding options, which could include your child taking on some of the cost.

Completing a Free Application for Federal Student Aid (FAFSA) is one of the first recommended steps to applying for student financial aid, whether that is in the form of grants, scholarships, federal loans, or work-study. Filing for the 2025-2026 school year opens in December, 2024 (a delay from the usual October 1) and will continue until June 30, 2025.

It’s recommended to complete the form as soon as possible because there are differing deadlines to be aware of, including for individual colleges as well as federal and state deadlines. The sooner you submit your FAFSA, generally, the better your chances of receiving aid will be.

Colleges and universities will use the information reported on the FAFSA to determine how much aid a student is eligible for. Even if your child has not applied to a school yet, they can list that school on the FAFSA, so encourage them to include their dream school as well as those they consider safety schools.

A Student Aid Report (SAR), which is a summary of information provided on the FAFSA, will be sent within three weeks — sometimes sooner. Corrections to the FAFSA, if needed, can be made after reviewing this report. The SAR contains information about a student’s Expected Family Contribution (EFC) (which will soon be called the Student Aid Index or SAI). It is recommended that the report be kept for your records.

The schools listed on the FAFSA will have access to the information within a few days of when the form is submitted. If your student is approved for financial aid, they will receive financial aid award letters from each school they applied and were accepted to. These letters will include information such as the cost of attendance (COA), EFC/SAI, grants, scholarships, loans, and other financial aid that your child might be eligible for.

Comparing each financial aid award letter can help you and your child determine the financial obligation of attending each school. It is recommended to exhaust all federal aid options before considering a private loan. But if you are looking for supplemental funding for your child’s education, private student loans may be an option.

If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.

About the author

Ashley Kilroy

Ashley Kilroy is a seasoned personal finance writer with 15 years of experience simplifying complex concepts for individuals seeking financial security. Her expertise has shined through in well-known publications like Rolling Stone, Forbes, SmartAsset, and Money Talks News. Read full bio.

SOIS0723026

Capital expenditures, or CapEx, refers to the money a company spends or invests to promote its future growth. This is different from operating expenditures, which deal with the day-to-day costs of running a business. Both show up on a business accounting statement, and both matter for maintaining a healthy bottom line.

From an investment perspective, understanding capital expenditures and how a company spends its money can be useful for evaluating stocks when deciding where to invest. More specifically, the capital expenditure formula is often part of a fundamental analysis approach to gauge a company’s overall financial health and stability. Understanding how to calculate capital expenditures can be helpful when comparing stocks.

Capital Expenditures: Definition & Overview

Here’s a simple definition of capital expenditure: A capital expenditure is any amount of money that a company spends to further its growth.

Capital expenditures typically include the purchase, improvement, or maintenance of physical assets, though it can also refer to intangible assets, such as patents or trademarks. It includes assets that a company will own over more than one accounting period, many of which can depreciate in value over time.

Types of Capital Expenditures

The type of capital expenditures a company has depends on the industry it belongs to and the nature of its business. So, if you’re sector investing, the analyses may vary. Generally, capital expenditure examples can include:

•  Land

•  Buildings or warehouses

•  Equipment

•  Machinery

•  Business vehicles

•  Computer hardware and/or software

•  Furniture or fixtures

•  Patents

•  Licenses

Capital expenditures are most often long-term investments that have a shared goal: to help promote or further business growth. For example, a manufacturing company may decide to upgrade its equipment to speed up production and increase efficiency. The return on that investment comes later, when the company increases its output and generates bigger profits.

Capital Expenditures vs. Operating Expenditures

In accounting, capital expenditures are separate from a company’s operating expenditures. An operating expenditure is money a company spends to maintain normal business operations.

Examples of operating expenditures include:

•  Rent or lease payments for business property

•  Utilities

•  Insurance

•  Employee payroll

•  Inventory

•  Marketing costs

•  Office supplies

Bottom-up investors use both capital expenditures and operating expenditures to measure how a company spends its money, but it’s important to avoid confusing them. In a nutshell, capital expenditures represent long-term investments in assets that will be used in the future, while the operating expenditures represent short-term outlays.

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How to Calculate Capital Expenditures

Companies calculate capital expenditures and include it on their cash flow statements under the section noted for investing activities. If you have access to a company’s cash flow statement or other key company financial information, you wouldn’t necessarily need to calculate capital expenditures because the relevant numbers would already be included.

But if you don’t have cash flow information available, or you simply want to do the math on your own, there’s a capital expenditures formula you can use. This formula is simple, though it does require that you have certain information about a company’s financial situation, including:

•  Depreciation and amortization for capital expenditure assets

•  Current period PP&E (Property, Plant & Equipment)

•  Prior period PP&E

Property, Plant & Equipment refers to assets listed on a company’s balance sheet. In simpler terms, these are the assets that help generate revenue and profits for the business. So again, this can include things like equipment, machinery, vehicles, office equipment or land. Of those assets, land is the only one that typically doesn’t depreciate in value over time.

If you have these three pieces of information, you can then apply the capital expenditures formula. The formula looks like this:

CapEx = Current period PP&E – Prior period PP&E + Current period depreciation

Here’s how it works using hypothetical numbers. Say you’re evaluating a company that has a current period PP&E of $70,000, a prior period PP&E of $50,000 and $20,000 in current period depreciation. Your capital expenditures formula would look like this:

CapEx = $70,000 – $50,000 + $10,000
CapEx = $30,000

These calculations are relatively easy to do if you have all the relevant details from a company’s balance sheet. Once you can calculate capital expenditures, you can use the formula to evaluate investments.

Capital Expenditures and Fundamental Analysis

Fundamental analysis is one strategy for comparing investments and it’s typically used when investing for the long-term. With this type of analysis, the emphasis is on what makes a company financially healthy. This is something you may be interested in when trying to evaluate a stock appropriately and decide whether to invest in it.

A fundamental analysis approach considers a company’s assets and liabilities. But it also utilizes certain financial ratios that measure how money moves in and out of the company. Some of the most important ratios include:

•  Price to earnings (P/E) ratio

•  Earnings per share (EPS)

•  Current ratio

•  Quick ratio

•  Return on equity (ROE)

•  Book-to-value ratio

•  Projected earnings growth (PEG)

All of these ratios measure a company’s value, which is important if you’re using a value investing approach. The goal there is to identify companies that have been undervalued by the market but have long-term growth potential. By investing in these companies and holding on to them, investors can benefit from price appreciation as they rise in value over time.

So where do capital expenditures fit in?

In terms of gauging a company’s value, capital expenditures offer insight into projected growth over the long-term. When a company regularly invests money in purchasing or upgrading assets, that can be a sign of financial strength and an eventual increase in value. On the other hand, a company pulling back on capital expenditures may hint at cash flow struggles that are impeding future growth.

One thing that’s important to keep in mind is that capital expenditures aren’t a foolproof indicator of a company’s long-term growth potential. It’s possible that a company may spend money with good intentions, only to have them backfire.

In an earlier example, we mentioned a manufacturing company purchasing new equipment to boost production. If that investment doesn’t pan out as expected–if, for example, the equipment requires constant maintenance and repairs that eat into profits or it falls short of expectations for increasing production speed–that could inhibit the company’s growth plans.

Recommended: How to Use Fundamental analysis for Researching Stocks

The Takeaway

Capital expenditures can be particularly helpful to investors if you favor a value investing approach or you lean toward buy-and-hold investing. Understanding how a company is investing in itself for the long-term can help you decide whether it makes sense as part of your portfolio.

Once you’re ready to invest, it’s important to choose the right tools for doing so. There are many out there, with numerous pros and cons. It’s a good idea to do your research when finding the right platform to invest, just like you would when researching specific investments.

Ready to invest in your goals? It’s easy to get started when you open an investment account with SoFi Invest. You can invest in stocks, exchange-traded funds (ETFs), mutual funds, alternative funds, and more. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).

Photo credit: iStock/akinbostanci

About the author

Rebecca Lake

Rebecca Lake has been a finance writer for nearly a decade, specializing in personal finance, investing, and small business. She is a contributor at Forbes Advisor, SmartAsset, Investopedia, The Balance, MyBankTracker, MoneyRates and CreditCards.com. Read full bio.