Consider the age group of your student
teaching a 6 year old who lives across the road
It's true that everyone learns differently, but generally you can anticipate your student's ability to learn and progress based on their age. The older the student, the more variance there is in this estimate.
At 6 years old, I can tell you from much experience, the progress is generally very slow and repetitive. This is good for you, because it gives you a very slow and steady pace to get comfortable with teaching an instrument for the first time.
I'm concerned about not being able to play well enough quickly to teach her well
At 6 years old, children don't have fine motor skills and often a very short attention span. Musical techniques that seem very basic to you will be difficult for a young beginner. You don't need a lot of knowledge to get your student started playing their instrument properly.
Your focus should be on your teaching method and not your ability
The most important thing you to do is focus on the delivery of the lesson not on your musical ability.
I know plenty of great musicians who have poor student retention rates. The main reason is the delivery of the lesson content; being a technically brilliant musician is not a big factor in good teaching.
Lessons should be fun
Endeavour to make every lesson as fun - this is crucial for children because of their short attention span. Young children tend to associate well with colours and characters; you should endeavour to use books which are recommended for children and have lots of colour. My personal recommendation for you is to try John Thompson's Easiest Piano Course: https://www.amazon.co.uk/Thompsons-Easiest-Piano-Course-Part/dp/0711954291
There a few things to consider for your making your lessons fun:
- Try to turn boring subjects into games; this website a great resource for different ideas. http://www.teachingideas.co.uk/subjects/musical-elements
- Give students something they can go home and show off to their friends and family. What sounds more exciting to show off? Mary had a little lamb? Or a simplified version of their favourite song?
Teaching should bring out the best your playing
You'll find teaching will make you a better player. It's one thing to be able to play a melody, but explaining it as simply as possible is an extra challenge. You'll ask more questions (like here) for the sake of wanting to be better for your students. Don't worry about your ability, it will continuously be changing and progressing; even teachers have more to learn.
I'm worried this habit will return along with other malpractices like not cutting my nails short enough and having terrible hand posture
A regular lesson time every week will get you in a routine of playing regularly - even if it's not many times a week. Chances are you'll want to prepare for every lesson you teach, this will get you into the habit of playing because you're now responsible for someone else's musical progress.
If you know correct posture, you should endeavour to teach it. As you'll be going at a very slow pace this will give you a chance to correct yourself as you go.
If your student does copy your bad posture, don't be afraid to tell them that your posture is wrong but you know that's it's wrong. Show them how to do it properly and that you want them to always play it that way so they can be a better pianist than you one day (this isn't a comment on your ability).
I like to motivate my students by telling them if they practice hard and keep playing music, they'll be better than me when they get older.
Don't rush lesson content
It may come as a shock to how slow progress could be with young students. Don't be afraid to repeat the same content over and over, while trying to keep it fun and interesting.
You'll find when you teach a student a song they like, they will be happy to play it over and over for weeks, if not months. Children love repetition - so giving your student new content every week is probably not in their best interest.
It's much better to solidify understanding rather keep moving onto fresh content - which brings us to the next subject...
Children are resistant to change and challenges
It comes as no surprise that we all want to get things right the first time. With music, however we all know there are challenges along the way to getting better. These challenges can very quickly frustrate and demotivate your students.
Your job is not only a teacher but a coach. You need to encourage your students along the whole process. You need to get excited and congratulate them when they do something well; reward them on an emotional level and reassure them through difficult obstacles.
If you want to be a successful teacher you need to concentrate on your lesson delivery. If you want to be a successful player you need to go and practice playing. The two skills go hand-in-hand, but they really are separate skills that need to be developed.
I recommend you take this opportunity as it will be a good experience for you. I also recommend that you don't take on any other students for at least 6 - 12 months so you can get comfortable with the teaching process.