Sebastian received a doodle board for his second birthday and immediately climbed up on my lap and said, "abc's", so we started with that. Next I started showing him two letter blends.
The next time we went to the library I looked in the card catalog, yes card catalog, it was 1994, for teaching reading. I found the first edition of this book from 1979. All you need is a red wide tip felt marker and large index cards. I bought mine at the dollar store!
I made them in groups of six starting with two and three letter words. When he mastered the first group, I made another and so on, gradually uping the length of the words. Continue to go over the older cards. Infact, always end with a few words your child knows, so they feel sucessful at the end of the session. I tried doing this twice to three times a day a day, but if you only have time for once a day, that is fine, too. Next is finding an easy book abd reading most of it to them, but stopping to point to words they know and letting them tell you what it is. My son's favorite book at that time was Go Dog Go, so I used that.
I did a blog post about them, HERE.