Use any square piece of fabric, preferably a cotton or cotton blend. Size should be from 3 1/2 inches to 5 inches square---your choice depending on the finished size you want. (BTW, the "cute little tool" that you can buy only makes one size yo yo.) Cut the square into a circle by using this little trick. Fold the square in half diagonally making a triangle. Cut off the corners using a curved motion. Repeat for the other two corners. Open and you should have a nice circle. If not, adjust your cutting placement and you will get the hang of it soon. Of course, if you have a die cut machine, you don't have to do this.
When you have your circle, fold over a little hem measuring approximately 1/8 to 1/4 inch.
Note: You may want to click on the picture to make it large to see. My thread should really have been another color so you could see it better. But, obviously, for the thread to not show in the finished product, it should match your fabric.
Sew all the way around to right next to the beginning point, right next to the knot.
Pull the knot out about an inch or two away from the fabric so you have two ends of thread. Hold the knot and pull the other end of the thread to gather. Then use both ends to tie a secure knot close to the fabric. You want to double tie it for security.
After the knot is tied, clip the ends close to the fabric. You may want to tug at the fabric all around by pinching it and pulling it into shape. This makes the gathers a little more even and there you have it--your own finished yo yo ready for crafting!!!