Savings Momentum

A hot topic among “consumer behavior” researchers is “shopping momentum.” The idea is that once a shopper makes a purchase they cross an important threshold making it much more likely that they’ll make other purchases on the same trip. While marketers work at spurring faster first purchases, I wonder if the same concept might apply to saving money. Opening a savings account, even with a small initial deposit, may become a motivator for future savings. With income tax rebates on their way, now’s a perfect time to put this theory to the test.

Many brokerage houses require an initial deposit of several thousand dollars to start an IRA—a savings momentum killer, to be sure. However, Fidelity’s SimpleStart IRA requires just $200 to get started as long as you commit to saving that much every month. Or, if you have children, test the savings momentum theory by opening a 529 college savings account. Depending on which plan you choose, you may be able to open such an account with as little as $25. For a primer on college savings plans and to compare plans, go to

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