I always was taught to sound out words when I was learning to read, unless my mom was tired then she just told me the word. But anyway: I was reading somewhere that you should just tell the children the word they are having trouble with. I can see how both ways are beneficial, if they sound the words out than they can get familiar with letters and their sounds, but also if you just tell them the word it might be eaiser for them to recognize it again. So which is the best way?

I don't think there is any "right" way to teach your children how to read. I was taught to sound out the words. Now as an adult, I see words that are unfamiliar and sound them out.