Read a portion of the US Flag Code covering PATRIOTIC CUSTOMS

The Evolution of Old Glory (anyflag.com) | Historical Flags (anyflag.com)

Flags of the World (CIA Fact Book)

There is nothing in the civilian flag code which requires any specific method of folding the flag or retiring the flag.
The American Legion site explains a traditional method of folding, likely the easiest method when working with children.

Each military branch has its own flag code; the recommends you consult the specific branch.

Parades and Review
National Flag Foundation
"The flag should be in front of the marchers. At the moment the flag passes in a parade or procession, all persons should show respect by standing at attention facing the flag with their right hand over their hearts. Persons in uniform should face the flag and render their formal salute. During a parade it is appropriate to salute only the first United States Flag. When other flags are included, the United States Flag should be centered in front of the others or carried to their right."

"It may be inferred that members of patriotic, uniform-wearing organizations, such as veterans groups and Boy and Girl Scout troops, may follow the standard for members of the military, leaving their headdress on and rendering their orgainization's salute."

Flag Rules and Regulations
from the Betsy Ross Homepage including links to
Army & Navy Flag Regulations
Cut a 5-Pointed Star in One Snip!

There are varying traditions in both flag and retirement ceremonies among various groups.
All ceremonies should be done with dignity and respect.

Flag Ceremonies from GSUSA

US Federal Flag Code provides that:
"THE FLAG, WHEN IT IS IN SUCH CONDITION THAT IT IS NO LONGER A FITTING EMBLEM FOR DISPLAY, SHOULD BE DESTROYED IN A DIGNIFIED WAY, PREFERABLY BY BURNING." (36 U.S.C. 176(K))

Sample Campfire Flag Retirement Ceremony
(used at Camp GF 2002)

When the flag was first adopted in 1777, the U.S. Continental Congress justified the flag's attributes in this way:
"White signifies Purity and Innocence; Red, Hardiness and Valor; Blue signifies Vigilance, Perseverance and Justice," with the stars forming "a new constellation."
from Learn2.com

US Department of Veteran Affairs: Customs and Symbols

The Betsy Ross Homepage
Who was Mary Pickersgill?

Flag Graphics from the Girl Scout Graphics Gallery