Great question- I've had great success with this method for teaching my kids (no offense meant

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-Find a gentle grass hill that flattens out at the bottom, with no obstacles like trees or highways in the way.
(The grass makes it not as bad when you fall, and the gentle hill makes it so you can concentrate on learning to balance, without having to concentrate on pedalling).
-Start at the top of the hill with both feet off the pedals, off to each side to catch yourself when you start to tip. Let yourself go down the hill, gaining speed, and lean your body and steer one way or the other to correct when you feel yourself start to tip.
-If you use this hill method- and you're not afraid of getting your shins banged up a little bit- you'll get the hang of the balancing part pretty quick. Then stick your feet on the pedals, and try adding that in a little at a time. Remember, you HAVE to keep your speed up to balance, so the slower you go, the harder it is to balance.
Good luck!!