Step 1: Materials and Patterns
Step 2: Start simple
This also makes a schmancy bow tie! I recommend wearing it while you're knitting up the rest of the hat.
Step 3: Casting on the beard
PROVISIONAL CAST ON TUTORIAL
Try it out a couple of times until you get the hang of it. And yes, using a different color of yarn for this part DOES help.
Now that you've got that mastered, let's start knitting us a beard!
Follow the pattern for increases and decreases (you can fiddle with this bit to make a longer or shorter beard if you prefer). Now you've got the beard portion done and it's time to make the hat!