I currently HS a 6 year old first grader and I have a 2 YO. The 7YO and I sit down to do school stuff for 2-3 hours every morning after breakfast. This is when everyone in the family is typically in the best mood to make this work. I try not to let them get too riled up before we start (so, no running around, only quiet play before breakfast, and we move pretty swiftly from breakfast to school) - because if they start to get wild, it's tough coming back down from that for the 2YO.
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Ideally, the 2YO is still eating breakfast when 7YO and I start school - we eat breakfast in the same room where we keep our school stuff. I keep toys in bins she can reach, and she has several shelves of books that are just hers, and these are usually where she starts the day. Once she starts acting bored and starting to pester her brother to play, I get more active with her, and pull out any of the many activities I keep close at hand - playdough, painting, drawing, stringing beads, lacing cards. Her favorite is my small paper cutter (no, she cannot slice off a finger, it's perfectly safe) and some glue. She makes a huge mess, and I clean it up when we're all done. She has her own table and we try to keep her working there instead of at the big table. Sometimes she sits in my lap and looks at books, but this usually just leads to begging her brother to read to her (which we do, and plenty).
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She does not excel at finding new activities on her own - her preferred activity, any time, is her brother. (which is sweet, but inconvenient.) I've noticed, incidentally, that huffing "ugh, 2YO, your brother is trying to work!" doesn't actually typically have the desired result, lol.
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Typically, there are several periods when the 7YO works independently, and when he doesn't need me with him, I make it a point to either do something one-on-one with 2YO, or to leave the room with 2YO.
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Despite all this, the fact remains that the 2YO remains a fairly regular distraction. That is what 2YO are best at.