Elkonin boxes are a wonderful activity for beginning readers and writers! Elkonin boxes build phonological awareness skills by segmenting words into individual sounds, or phonemes. To use Elkonin boxes, a child listens to a word and moves a token into a box for each sound or phoneme. In some cases different colored tokens may be used for consonants and vowels or just for each phoneme in the word.
http://www.readingrockets.org/strategies/elkonin_boxes
http://www.readingrockets.org/strategies/elkonin_boxes