I have been knitting for far longer than I have been spinning. As a matter of fact, it was because of my love of knitting that I learned to spin. I saw all of these fantastic yarns that would make my projects perfect, but they also would have broken my budget. So, why not spin them myself?
One major consideration when spinning to knit, is the knitting pattern itself. You can adapt yarn thickness and feel to suit the project, but the project may also need to be adjusted to accommodate a hand-spun yarn. There are some knitting patterns that are designed specifically for handspun, but they are few and far between. Keep an eye out for these, especially when they include either a really good picture of the yarn they used or a sample of the yarn, as these can be excellent reference materials.
Be sure to finish the yarn prior to knitting it. As yarn is soaked and finished, the twist is distributed throughout the skein. Areas of over twist ease, while under twisted ones take up some of the twist passed from the over twisted sections. The finished yarn is also stronger and more able to withstand being knitted without breaking.
Even if you have never knitted a gauge block in your life, I urge you to make one before you begin your project. The variations that occur in the handspun yarn will affect your gauge. Also, I have found that I need fewer yards of handspun to achieve the same size object. Iím really not sure what causes this, but I love the fact that I can knit a huge shawl from less than 700 yards of lace weight handspun. Once you have knitted you gauge block, try washing it as you would the finished garment to check for shrinkage and loose dye.
Another important thing to consider is that handspun yarn does not always work well in a stockinette stitch. It can cause your garment to have a bias twist that is impossible to correct. One option would be to replace a stockinette stitch field with a moss stitch or other alternating pattern. This will add texture to the garment but it will also allow it to maintain its shape. The key is to have a relatively equal number of knits and purls in the garment.
Looking back, I think the budget would have been better off if I had stuck to knitting manufactured yarn, as my fiber stash now takes up the better part of two rooms in my house, not including the spinning wheels. Three of which adorn my living room.