1. Introduction to Financial Planning
Financial planning involves managing various aspects of your finances to achieve specific life goals. Whether you’re saving for retirement, managing debt, or simply keeping track of expenses, having a financial plan in place helps you make informed decisions and stay organized. Financial tools can make this process much easier by offering digital solutions for tracking, planning, and managing your money efficiently.
2. Budgeting Tools
Budgeting is the cornerstone of financial planning. By keeping track of your income and expenses, you can ensure that you’re living within your means, saving for the future, and avoiding unnecessary debt.
Mint: Mint is one of the most popular budgeting apps, offering a comprehensive view of your financial picture. It syncs with your bank accounts and automatically categorizes transactions, allowing you to set budgets for various categories like groceries, rent, and entertainment.
YNAB (You Need a Budget): YNAB operates on the principle of giving every dollar a job, helping users to prioritize spending and save for future goals. It’s especially useful for those who want to get out of debt or manage irregular income.
PocketGuard: This app simplifies budgeting by showing how much you have left to spend after accounting for bills and savings goals. It also helps you identify areas where you can cut back.
Goodbudget: Goodbudget is an envelope budgeting system that allows you to allocate money for various expenses. It’s great for couples or families looking to manage their household finances together.
When choosing a budgeting tool, consider your financial goals, the features you need, and how comfortable you are with linking your accounts.
3. Investment Management Tools
Managing investments is a crucial part of financial planning, whether you’re saving for retirement, growing your wealth, or planning for major life events.
Betterment: Betterment is a robo-advisor that provides automated investment advice based on your risk tolerance and goals. It offers diversified portfolios and rebalances your investments regularly to keep you on track.
Wealthfront: Similar to Betterment, Wealthfront uses algorithms to manage your investments automatically. It’s an excellent option for those who want a hands-off approach to investing.
Vanguard: Known for its low-cost index funds, Vanguard is a great choice for DIY investors who prefer to manage their portfolios with minimal fees.
Acorns: Acorns simplifies investing by rounding up your everyday purchases and investing the spare change. It’s a great option for beginners looking to dip their toes into the world of investing.
When deciding between robo-advisors and traditional investment platforms, think about how much control you want over your investments and whether you’re comfortable with automated management.
4. Retirement Planning Tools
Planning for retirement is essential to ensure you have enough savings to live comfortably in your later years. With the right tools, you can create a roadmap for retirement and stay on track to meet your financial goals.
Personal Capital: Personal Capital’s retirement planner allows you to project your retirement savings and spending. It also offers personalized advice to help you make the most of your retirement accounts.
Fidelity Retirement Score: This tool helps you assess your current savings and gives you a score to indicate whether you’re on track for retirement. It also offers tips to improve your score and boost your savings.
Blooom: Blooom is a robo-advisor for your 401(k) or other employer-sponsored retirement accounts. It analyzes your portfolio and provides recommendations to help you optimize your investments.
By using retirement planning tools, you can adjust your savings strategy over time and ensure that you’re making progress toward a secure financial future.
5. Debt Management Tools
Debt management is a critical component of financial planning, especially if you’re grappling with student loans, credit card debt, or other liabilities. Effectively managing and reducing debt can free up resources for savings and investments, leading to improved financial health. Fortunately, several tools are designed to help you tackle debt head-on.
Tally: Tally is an app that helps you manage and pay off credit card debt efficiently. By offering a lower-interest line of credit, Tally consolidates your credit card balances and automates payments to reduce interest costs. It monitors due dates, prevents late fees, and provides personalized advice to accelerate debt repayment.
Undebt.it: Undebt.it is an online tool that allows you to create a customized debt repayment plan. It supports popular strategies like the debt snowball and debt avalanche methods. The platform tracks your progress, projects payoff dates, and provides insights to keep you motivated on your journey to becoming debt-free.
Debt Payoff Planner: This app helps you devise a plan to eliminate your debts quickly. By inputting your debts, interest rates, and monthly payments, the Debt Payoff Planner calculates the most efficient payoff strategy. It offers visual charts and summaries to track your progress and shows how making extra payments can shorten your debt timeline.
Strategies for Debt Consolidation and Payoff:
- Debt Snowball Method: Focus on paying off your smallest debts first while making minimum payments on larger ones. This method builds momentum and motivation as you eliminate debts quickly.
- Debt Avalanche Method: Prioritize debts with the highest interest rates. This approach saves money on interest over time but may require more patience as high-interest debts are often larger.
- Consolidation Loans: Combine multiple debts into a single loan with a lower interest rate. This simplifies payments and can reduce the total interest paid.
- Balance Transfer Credit Cards: Transfer high-interest credit card debt to a card with a 0% introductory APR. This can provide temporary relief from interest charges, allowing you to pay down the principal faster.
Utilizing debt management tools and strategies can significantly reduce financial stress and free up funds for other financial goals.
6. Tax Planning Tools
Effective tax planning is essential for maximizing your income and reducing liabilities. By staying organized and informed about tax laws, you can take advantage of deductions, credits, and other opportunities to lower your tax bill.
Tax Planning Basics:
- Understand Tax Brackets: Knowing your tax bracket helps you estimate your tax liability and plan accordingly.
- Keep Accurate Records: Maintain organized records of income, expenses, and deductions to simplify the filing process.
- Plan for Life Changes: Major life events like marriage, having a child, or buying a home can impact your taxes.
Best Tax Software:
TurboTax: TurboTax offers a user-friendly platform for filing taxes, whether you’re a W-2 employee or a self-employed individual. It guides you through the filing process with personalized questions and searches for deductions and credits you may qualify for.
H&R Block: With both online and in-person services, H&R Block provides comprehensive tax solutions. Their software is equipped to handle complex tax situations, and professional assistance is available if needed.
TaxSlayer: TaxSlayer offers affordable tax preparation services with robust features. It’s suitable for filers who are comfortable with less guidance and want a cost-effective solution.
Optimizing Taxes Year-Round with Digital Tools:
- Use Expense Tracking Apps: Tools like Expensify or QuickBooks Self-Employed help track deductible expenses throughout the year, reducing last-minute scrambling.
- Plan for Estimated Taxes: If you’re self-employed, apps like TaxAct can help you calculate and pay quarterly estimated taxes to avoid penalties.
- Stay Informed: Use apps like IRS2Go to stay updated on tax deadlines, refunds, and changes in tax laws.
By integrating tax planning tools into your financial routine, you can minimize your tax burden and avoid surprises during tax season.
7. Expense Tracking Tools
Monitoring your expenses is vital for maintaining a healthy budget and identifying areas where you can save. Expense tracking tools provide insights into your spending habits, helping you make informed financial decisions.
Why Tracking Expenses Matters:
- Awareness: Understanding where your money goes prevents overspending and uncovers unnecessary expenses.
- Budget Adherence: Tracking helps ensure you stick to your budget and financial goals.
- Fraud Detection: Regularly reviewing transactions can alert you to fraudulent activity.
Top Tools to Track Expenses:
Expensify: Ideal for both personal and business expenses, Expensify simplifies expense reporting. It allows you to scan receipts, track mileage, and generate expense reports effortlessly.
Wally: Wally offers a comprehensive view of your finances by tracking expenses and income. It supports multiple currencies and provides insights into your spending patterns.
Spendee: Spendee allows you to create shared wallets for joint expenses, making it perfect for families or roommates. It offers visualizations of your spending and helps categorize expenses.
Integrating Expense Tracking into Your Daily Life:
- Automate Data Entry: Use apps that sync with your bank accounts to automatically import transactions.
- Set Reminders: Schedule regular check-ins to review and categorize expenses.
- Use Notifications: Enable alerts for unusual spending or when you reach budget limits.
By consistently tracking expenses, you can stay in control of your finances and adjust your spending habits as needed.
8. Net Worth Calculators
Knowing your net worth provides a snapshot of your financial health. It’s calculated by subtracting your liabilities from your assets. Regularly monitoring your net worth can help you gauge progress toward your financial goals.
Importance of Knowing Your Net Worth:
- Financial Benchmarking: Helps you understand your current financial position.
- Goal Setting: Provides a basis for setting realistic financial goals.
- Progress Tracking: Allows you to measure improvements over time.
Best Net Worth Calculators:
Personal Capital Net Worth Tracker: Personal Capital offers a comprehensive tool that aggregates all your financial accounts, including bank accounts, investments, loans, and mortgages, to calculate your net worth in real-time.
Bankrate Net Worth Calculator: This online calculator provides a simple way to input your assets and liabilities to determine your net worth. It’s user-friendly and doesn’t require account linking.
CalcXML: CalcXML offers customizable calculators for various financial scenarios, including net worth calculation. It provides detailed reports and projections.
How to Calculate and Grow Your Net Worth:
- List All Assets: Include cash, investments, real estate, and valuable personal property.
- List All Liabilities: Include mortgages, loans, credit card debts, and other obligations.
- Subtract Liabilities from Assets: The result is your net worth.
Strategies to Increase Net Worth:
- Reduce Debt: Pay down high-interest debts to improve your net worth.
- Increase Savings: Allocate more funds to savings and investments.
- Invest Wisely: Diversify your portfolio to grow your assets over time.
Regularly updating your net worth statement helps you stay focused on building wealth and achieving financial stability.
9. Savings and Goal-Setting Tools
Setting financial goals and saving accordingly is crucial for both short-term needs and long-term aspirations. Savings tools assist in automating the process and keeping you accountable.
How Savings Tools Help You Reach Financial Goals:
- Automation: Automatic transfers make saving effortless.
- Visualization: Tracking progress toward goals keeps you motivated.
- Customization: Set specific goals with target amounts and deadlines.
Best Tools for Savings and Goal-Setting:
Qapital: Qapital allows you to set personalized savings goals and uses rule-based triggers to save money automatically. For example, you can round up purchases or save when you achieve fitness goals.
Chime: Chime offers a “Save When You Spend” feature that rounds up transactions and deposits the difference into a savings account. It also provides automatic savings options when you get paid.
Digit: Digit analyzes your spending habits and income patterns to determine safe amounts to save, transferring small amounts to your savings account regularly.
Building Short-Term and Long-Term Savings Plans:
- Emergency Fund: Aim to save 3-6 months’ worth of expenses for unexpected situations.
- Short-Term Goals: Save for vacations, a new car, or home renovations.
- Long-Term Goals: Plan for retirement, children’s education, or a down payment on a house.
By leveraging savings tools, you can make steady progress toward your financial objectives without significant lifestyle changes.
10. Credit Monitoring Tools
Maintaining a good credit score is essential for securing loans, credit cards, and favorable interest rates. Credit monitoring tools help you keep track of your credit health and alert you to potential issues.
Why Monitoring Credit is Critical:
- Fraud Detection: Early detection of unauthorized activity can prevent identity theft.
- Credit Score Improvement: Monitoring allows you to address factors affecting your score.
- Loan Eligibility: A good credit score increases your chances of loan approval.
Best Credit Monitoring Services:
Credit Karma: Credit Karma provides free credit scores and reports from TransUnion and Equifax. It offers personalized recommendations for credit cards and loans based on your profile.
Experian: Experian’s free service gives you access to your Experian credit report and FICO score. Paid plans offer daily monitoring and alerts for all three credit bureaus.
myFICO: myFICO provides comprehensive credit monitoring with access to FICO scores used by most lenders. It offers identity theft protection and detailed credit reports.
Tips for Improving and Maintaining Good Credit Scores:
- Pay Bills on Time: Late payments can significantly impact your score.
- Reduce Credit Utilization: Aim to use less than 30% of your available credit.
- Avoid Unnecessary Hard Inquiries: Limit applications for new credit.
- Check for Errors: Regularly review your credit reports for inaccuracies and dispute them promptly.
By using credit monitoring tools, you can proactively manage your credit health and be better prepared for major financial decisions.
11. Insurance Planning Tools
Insurance is a vital part of financial security, protecting you and your assets from unforeseen events. Insurance planning tools simplify the process of finding and managing the right policies.
How Insurance Planning Fits into Financial Security:
- Risk Mitigation: Protects against financial losses due to accidents, illness, or disasters.
- Peace of Mind: Provides confidence that you and your loved ones are safeguarded.
- Financial Planning: Ensures that unexpected expenses don’t derail your financial goals.
Best Insurance Management Platforms:
Policygenius: Policygenius is an online marketplace that allows you to compare insurance quotes for life, health, auto, and home insurance. It simplifies the process with easy-to-understand information and expert advice.
Gabi: Gabi specializes in comparing auto and home insurance policies. By analyzing your current coverage, Gabi provides recommendations to save money without sacrificing protection.
Lemonade: Lemonade offers renters, homeowners, and pet insurance with a user-friendly app. It uses AI to streamline the application process and claims handling.
Simplifying the Insurance Shopping Process:
- Compare Multiple Quotes: Use comparison tools to find the best rates and coverage.
- Assess Your Needs: Determine the types and amounts of coverage necessary for your situation.
- Read Reviews: Consider customer feedback and company reputations.
By leveraging insurance planning tools, you can ensure adequate protection while potentially reducing premiums.
12. College Savings Tools
Planning for education expenses is essential as college costs continue to rise. College savings tools help you prepare financially for your children’s future education needs.
Planning for Higher Education Expenses:
- Estimate Costs: Consider tuition, room and board, books, and other fees.
- Start Early: The sooner you begin saving, the more you benefit from compound interest.
- Explore Financial Aid: Understand grants, scholarships, and loan options.
Top Tools for College Savings:
CollegeBacker: CollegeBacker simplifies investing in 529 college savings plans. It allows family and friends to contribute, making it easier to reach your savings goals.
ScholarShare: Offered by the state of California, ScholarShare provides 529 plans with low fees and a variety of investment options.
U-Nest: U-Nest is a mobile app that helps you set up and manage a tax-advantaged college savings account. It offers flexible investment portfolios tailored to your risk tolerance.
How 529 Plans Can Help with Education Savings:
- Tax Advantages: Contributions grow tax-free, and withdrawals for qualified education expenses are tax-exempt.
- High Contribution Limits: Allows substantial savings over time.
- Flexibility: Funds can be used for tuition, fees, books, and sometimes K-12 expenses.
By utilizing college savings tools, you can ease the financial burden of higher education and provide opportunities for your children without compromising your financial stability.
13. Estate Planning Tools
Estate planning ensures that your assets are distributed according to your wishes after your passing. Digital tools make it accessible to create and manage legal documents without expensive attorney fees.
The Role of Estate Planning in Long-Term Financial Health:
- Asset Distribution: Determines how your assets are allocated to beneficiaries.
- Guardianship: Appoints guardians for minor children.
- Tax Efficiency: Minimizes estate taxes and legal costs.
Top Estate Planning Software:
Quicken WillMaker: Quicken WillMaker provides a comprehensive suite for creating wills, trusts, powers of attorney, and other estate documents. It’s user-friendly and regularly updated to reflect current laws.
Trust & Will: This online platform simplifies estate planning with guided templates. It offers legal documents tailored to your state’s requirements.
LegalZoom: LegalZoom provides customizable legal documents with the option to consult with attorneys. It covers wills, living trusts, and other essential estate planning tools.
Digital Solutions for Creating Wills and Trusts:
- Step-by-Step Guidance: Platforms walk you through each section, ensuring all critical elements are included.
- State-Specific Documents: Legal forms are customized to comply with local laws.
- Secure Storage: Some services offer digital storage and updates as your circumstances change.
By taking advantage of estate planning tools, you can secure your legacy and provide clear instructions for your loved ones.
14. Comprehensive Financial Planning Tools
For those seeking an all-in-one solution, comprehensive financial planning tools offer a holistic view of your finances, integrating various aspects like budgeting, investing, and tracking net worth.
All-in-One Solutions for Overall Financial Health:
- Centralized Management: Monitor all financial accounts in one place.
- Holistic Insights: Understand how different financial elements impact each other.
- Personalized Advice: Receive recommendations based on your entire financial picture.
Best Comprehensive Financial Tools:
Personal Capital: Personal Capital combines investment management with robust financial planning tools. It offers a dashboard that tracks your net worth, spending, investments, and retirement goals.
Quicken: Quicken provides desktop software for managing personal finances, including budgeting, bill pay, investment tracking, and more. It’s suitable for users who prefer offline access.
YNAB (You Need a Budget): While primarily a budgeting tool, YNAB also offers features to help with goal tracking and financial education, providing a comprehensive approach to money management.
How to Manage All Aspects of Finances in One Place:
- Link Accounts Securely: Connect bank accounts, credit cards, loans, and investment accounts.
- Set Financial Goals: Define short-term and long-term objectives within the platform.
- Regularly Review: Schedule time to analyze reports and adjust plans as needed.
Using comprehensive tools streamlines financial management, saving time and providing clarity to make informed decisions.
15. Mobile Apps for On-the-Go Financial Planning
In today’s fast-paced world, mobile apps offer the convenience of managing finances anytime, anywhere. They ensure you stay connected to your financial health, even on the move.
The Convenience of Mobile Finance Apps:
- Real-Time Updates: Access up-to-date information on accounts and transactions.
- Instant Notifications: Receive alerts for payments, low balances, or unusual activity.
- Ease of Use: Perform tasks like transferring funds or paying bills with a few taps.
Top Mobile Financial Planning Apps:
Mint: Mint’s mobile app offers budgeting, bill tracking, and credit monitoring. It provides personalized tips and alerts to help you stay on top of your finances.
Prism: Prism consolidates bills and financial accounts, allowing you to view balances and due dates in one app. It sends reminders to prevent late payments.
Goodbudget: Goodbudget’s app enables envelope budgeting on the go, helping you allocate funds for different spending categories and track expenses collaboratively.
The Future of Financial Planning on Mobile Devices:
- Artificial Intelligence: AI-driven insights and personalized advice.
- Voice Commands: Integration with virtual assistants for hands-free management.
- Enhanced Security: Biometric authentication and advanced encryption.
Embracing mobile apps for financial planning ensures that managing your money is as convenient as possible.
16. Spending Analysis Tools
Analyzing your spending habits can reveal patterns and areas where you can cut back or reallocate funds. Spending analysis tools provide detailed reports and insights to help you make smarter financial decisions.
How to Analyze Spending Habits:
- Categorize Expenses: Break down spending into categories like food, entertainment, and utilities.
- Identify Trends: Look for patterns in spending over weeks or months.
- Set Benchmarks: Compare your spending to budgeted amounts or industry averages.
Best Spending Analysis Tools:
Clarity Money: Clarity Money uses AI to analyze your spending, identify wasteful subscriptions, and provide suggestions to save money. It offers a clear visual representation of your financial habits.
Truebill: Truebill helps you manage subscriptions, lower bills, and monitor spending. It negotiates with service providers on your behalf to reduce costs.
Emma: Emma connects to your bank accounts and credit cards to track spending. It identifies overdrafts, wasteful subscriptions, and provides tips to optimize your finances.
Using Data to Adjust Your Financial Habits:
- Eliminate Unnecessary Expenses: Cancel subscriptions or services you don’t use.
- Adjust Budgets: Reallocate funds to more critical areas based on spending patterns.
- Set Spending Limits: Implement caps on discretionary spending categories.
By leveraging spending analysis tools, you can gain control over your finances and align your spending with your financial goals.
17. Tools for Business Financial Planning
For entrepreneurs and small business owners, managing business finances is as important as personal finances. Specialized tools help with accounting, invoicing, payroll, and expense tracking.
Financial Planning for Small Businesses:
- Budgeting and Forecasting: Plan for future revenues and expenses.
- Cash Flow Management: Ensure sufficient liquidity to meet obligations.
- Regulatory Compliance: Maintain accurate records for tax and legal purposes.
Best Tools for Business Finances:
QuickBooks: QuickBooks offers comprehensive accounting solutions for small to medium-sized businesses. It handles invoicing, expense tracking, payroll, and tax preparation.
FreshBooks: FreshBooks is ideal for service-based businesses and freelancers. It simplifies invoicing, time tracking, and expense management with a user-friendly interface.
Xero: Xero provides cloud-based accounting software with real-time financial data, bank reconciliation, and collaboration features for accountants and business owners.
Simplifying Payroll, Invoicing, and Expenses:
- Automate Invoicing: Schedule recurring invoices and accept online payments.
- Streamline Payroll: Use payroll services that calculate taxes and file forms automatically.
- Track Expenses: Scan receipts and categorize expenses for accurate record-keeping.
Utilizing business financial planning tools can save time, reduce errors, and provide insights to grow your enterprise.
18. Tools for Tax-Deferred Accounts
Tax-deferred accounts like 401(k)s and IRAs are essential for retirement planning. Managing these accounts effectively can maximize your savings and minimize tax liabilities.
Understanding Tax-Deferred Accounts:
- 401(k) Plans: Employer-sponsored retirement accounts with pre-tax contributions.
- Traditional IRAs: Individual retirement accounts with tax-deductible contributions.
- Tax Benefits: Taxes on contributions and earnings are deferred until withdrawal.
Best Platforms for Tax-Deferred Accounts:
Fidelity: Fidelity offers a wide range of investment options for IRAs and 401(k) rollovers, with low fees and robust planning tools.
Charles Schwab: Schwab provides comprehensive retirement account services, including Traditional and Roth IRAs, with access to professional advice.
E*TRADE: E*TRADE offers flexible retirement accounts with a variety of investment choices and educational resources.
Maximizing Your Tax-Deferred Investment Options:
- Contribute Maximum Allowed: Take full advantage of contribution limits to maximize tax benefits.
- Diversify Investments: Allocate assets across different classes to manage risk.
- Monitor and Rebalance: Adjust your portfolio periodically to align with your retirement goals.
By effectively managing tax-deferred accounts, you can enhance your retirement savings and enjoy tax advantages.
19. Tools for Charitable Giving
Incorporating charitable giving into your financial plan can provide personal fulfillment and potential tax benefits. Tools for managing donations make it easier to give strategically.
Planning Charitable Donations:
- Set a Giving Budget: Determine how much you can afford to donate.
- Research Organizations: Ensure that your contributions go to reputable charities.
- Consider Tax Implications: Understand how donations affect your tax situation.
Best Tools for Managing Charitable Contributions:
Charity Navigator: This platform rates charities based on financial health, accountability, and transparency, helping you make informed decisions.
JustGiving: JustGiving allows you to donate to causes worldwide, track your contributions, and share campaigns with your network.
Donorbox: Donorbox provides a secure and straightforward way to set up recurring donations, with options for employer matching and tax receipts.
How Charitable Giving Fits into Financial Planning:
- Tax Deductions: Donations to qualified organizations may be deductible, reducing taxable income.
- Estate Planning: Charitable trusts can be part of your legacy, providing benefits to causes you care about.
- Financial Goals Alignment: Aligning giving with your values can enhance your overall financial satisfaction.
Using charitable giving tools ensures that your contributions are effective and aligned with your financial strategy.
20. Creating a Financial Plan with Digital Tools
Developing a comprehensive financial plan is crucial for achieving your financial goals. Digital tools make it accessible to create, implement, and monitor a personalized plan.
How to Create a Financial Plan Using Digital Tools:
- Assess Your Current Situation: Use budgeting and net worth tools to understand where you stand.
- Define Financial Goals: Set SMART (Specific, Measurable, Achievable, Relevant, Time-bound) goals for savings, debt reduction, and investments.
- Choose Appropriate Tools: Select platforms that cater to your specific needs, such as retirement calculators or investment apps.
Steps to Create a Custom Plan Based on Personal Goals:
- Budgeting: Establish a budget using tools like Mint or YNAB to manage income and expenses.
- Debt Management: Utilize apps like Undebt.it to create a debt payoff strategy.
- Savings Goals: Set up automatic savings with apps like Digit or Qapital.
- Investing: Begin or optimize investments with platforms like Betterment or Vanguard.
- Retirement Planning: Use calculators and advisors from Personal Capital or Fidelity.
- Insurance and Estate Planning: Secure appropriate insurance and create legal documents using Policygenius or Trust & Will.
Tracking and Updating Your Financial Plan Over Time:
- Regular Reviews: Schedule periodic check-ins to assess progress and make adjustments.
- Adapt to Life Changes: Modify your plan in response to significant events like marriage, childbirth, or career shifts.
- Seek Professional Advice: Consult financial advisors when needed to refine your strategy.
By leveraging digital tools, you can create a dynamic financial plan that evolves with your life and keeps you on track toward your goals.
Conclusion
Simplifying your financial life is achievable with the right tools. From budgeting apps to investment platforms and retirement calculators, there’s a wealth of resources available to help you take control of your finances. By integrating these tools into your daily routine, you can make informed decisions, reduce financial stress, and work steadily toward your financial goals.
Remember, the key to successful financial planning is consistency and adaptability. Regularly assess your financial situation, stay informed about new tools and strategies, and don’t hesitate to seek professional guidance when necessary. With dedication and the assistance of these top financial planning tools, you can simplify your life and secure a prosperous future.
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