In order to teach a child to hold the guitar properly, you'll need to learn to do it yourself first. Do the following:
- Find a straight-back, armless chair, and take a seat. Sit comfortably, keeping your back relatively straight, with your knees apart.
- Pick up the guitar. Rest the guitar on your right thigh.
- Pull the body of the guitar flat against your stomach.
- Hold the guitar so that the neck runs roughly parallel to the floor.
- Your upper right arm should rest against the top of the guitar, causing your right hand to naturally align over the sound hole of the instrument.
- Grab the neck of the guitar with your left hand. You should position your thumb behind the neck, with your fingers positioned loosely over the fretboard.
Once you're comfortable holding the guitar yourself, you'll want to try and teach a child to hold the instrument properly. From experience, I can tell you this can feel like a losing proposition within minutes they'll be holding the guitar flat in their lap. Remind them of proper posture occasionally, but not constantly. Remember the initial goal here is to teach them to enjoy the guitar. Over time, as the music they try to play gets more challenging, most kids will naturally begin holding the guitar properly.