Between 8 and 10 is ideal. Any earlier, and your child may be unwilling to part with his money. By 8 or so, though, your child is ready to understand how a bank works.
Start by taking your child to visit the bank. Some credit unions and community banks really cater to children and will help explain how money is kept in a vault, how deposits are made, and how money can be withdrawn. Show your child a bank statement to teach how savings accounts earn interest.
Many kids get anxious when they learn that they won't get back the exact bills and coins they deposit in the bank. Explain that the bank keeps careful track of how much each person deposits, so he can always get that much out again.
A savings account is the way to go at this age. Most are set up with a parent as the custodian, so at least initially your child will need to have you there to withdraw money.These trips to the bank are a great opportunity for you and your child to talk about saving. Decide together how much money will be kept at home for smaller purchases and agree to set a goal for what the money in the savings account will be used for. Some parents even offer the incentive of matching what their child saves – maybe 50 cents for every $1 or $1 for every $1.