It's never too early to start saving. However, for the first 18 to 21 years of a person's life -- depending on the state in which he lives -- it's too early for him to open a savings account in his own name. Although the minimum age at which a person can open his own savings account varies by state, federal law forbids all minors from holding private savings or checking accounts.
Minors
According to U.S. law, by 18, a person can legally sign contracts by himself . Before that, the person is considered a minor and cannot sign legally binding contracts without the assistance of a legal guardian. The opening of a savings account, in which a person can deposit money and allow it to earn interest, requires signing a contract; therefore, a person cannot legally open a savings account while a minor.
State Law
Although the age at which a person can sign contracts -- known as "the age of majority" -- is 18 in most states, in a few states the age is higher. In Alabama and Nebraska, the age is 19, while in Indiana, Mississippi, and New York, it is 21. A person can only open a savings account in these states when they have reached the legal age of majority.
Custodial Accounts
A person under the age of majority can open a custodial account overseen by a guardian, who pledges to manage the account in the child's best interest. Under a federal law known as the Uniform Gift to Minors Act, a custodian will control an account for a child and hold it in trust until the child reaches an age in which he can legally take control of the account.
Trust Transfer
Curiously, the age at which a person can legally sign contracts in a state does not always precisely match up to the age in which a custodial account will be turned over to him. In all states, the age at which a custodial account can be transferred is 18 or 21. Even if this age of transfer exceeds the age at which a person can sign contracts, the person must still wait until the age of transfer to take control of the account.
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