I think you've started off exactly the right way. I,too, sew with my grandson sitting on my knee and we both love it. There is a book out there called Kids Can Sew which I used with my own children as they were learning how to sew but I think the best advice is to just keep doing as you are. This way, he can direct which way he wants to go and you can provide the right technical help. So much fun to sew together isn't it?