My seven year old son —the same age as me when I learned to knit— is learning to knit. He already knows how to finger knit. But teaching kids to knit is a little tricky. There are a lot of little coordinated movements required, and mistakes can make it frustrating.
There are lots of online articles on teaching kids to knit, but here are the points that I'm finding most important in teaching my own son to knit:
1. Use a bulky soft yarn.
2. Use large needles, about 6 mm. We found that circular needles worked well. Straight needles meant that the ends of the needles would catch on things. I liked the zinc plated needles from knit picks because the points are nice and sharp, so slide into stitches easily. Bamboo is nice because it's comfortable on the hands. Look here for a list of knitting needle sizes.
3. Cast on and knit the first row for the child, keeping the stitch tension nice and relaxed.
4. Don't hover, but do check every couple of rows for pesky problems that will blow up later. If you can, fix dropped stitches and accidental yarn-overs.
5. Keep it simple and teach garter stitch to start.
6. I noticed that putting the right hand needle through the wrong part of the stitch was an easy mistake to make. Make sure that when they make their "X" that the right needle is behind the left.
Ah, that's better...
Dropped stitches? Hilarious! (for now)