Read a variety of folk and fairy tales to your child so he becomes familiar with the structure and key elements of a good folk tale. Stories such as "Babe the Blue Ox," "John Henry" and "Hansel and Gretel" may be very different, but they are often similar in moral delivery and structure. The more you read and discuss these stories with your child, the more he will recognize the distinct voice and subject matter of folk tales.
Create characters with your child before you work on a story. Sit with your child and talk about possible characters, including names and descriptions. Allow your child to help develop the characters so she is familiar with them before placing them in a story setting. Play the "What if?" game with your child. Discuss what particular characters might do in specific situations.
Write the folk tale with your child. Help him create a general story outline. Take time at bedtime to allow your child to tell you a story based on the characters you've created. Many popular folk tales begin as oral stories and developed over time. As your child tells his folk tale each night, he will be developing the story before he sits down to write it on paper. This will make the writing process easier.