Just because I have a son at the same age who plays chess for three and a half years already, I may think I can even write a book about "how to".. But, the things are not simple, not at all! Every kid has its own individuality and not every kid can become a champion no matter how is trained. Chess is not a pure knowledge only, it's an area where one must have a character to become first amongst equals.
Anyway, I can say a thing or two, just to give you some food for thought.
1. You have to show this kid how to fight. A kid needs its own heroes to follow. You probably have to go to an open tournament with this kid and play like you're Kasparov or Carlsen - burn yourself if you have to, fight for every inch of the chessboard, but show this kid how to fight for a win, no matter what!
2. Learn this kid how to play the endgame! It's the field where most of the kids are hopeless. They know some of the basic endgames which their trainers have shown to them and that's all. And it's not enough.. The endgame play is way different than the middlegame one...and the kids don't get it. Let me illustrate it with a game!
Here my son was the second player. And the first player was a kid who didn't get that after 24...fxg6 an endgame will follow and therefore the rules and conditions will change. He played 25.f4 and 26.f5 as if he wants to mate the black king. And then succumbed. Even if he knew how to play the basic endgames it didn't help him, you know..
3. I think it's not early for showing and teaching this kid a basic opening repertoire of his own. Of course, some may say otherwise, but don't listen to them! A kid has to know how to play the first 10 moves (at least) of every game it plays. But.., don't teach this kid to play the moves while it doesn't understand the reason behind them. Every single move of its repertoire has to be explained in connection with the middlegame plans that will come afterwards. And you have to be sure that the kid understands them. A single "yes" is not enough. Ask the kid to explain the moves as if it teaches you and not vice-versa.
4.Middlegame plans. Try to explain the kid that every single move has to be connected with the previous and the following ones. Don't show the kid games by Kasparov, Karpov, Fischer, Carlsen and alike! Show the kid the games of his rivals and explain him the reason of every move, why they go wrong, what is the reason they play bad moves and so on...and so on.
That's enough. I didn't want to write so many words at the time I started. Anyway, one thing is sure - first teach him how to fight! To fight vigourously.. Let him hear the famous Churchill's speech, if you need to for that matter. "We shall never surrender!"
Thanks a lot Vass sir...When it comes to help others you are one of the best