I knitted the pocket as a separate piece and sewed it on. It would be cast on half the stitches or 12. You can knit the bag an inch longer, fold down a casing to the inside, sew it up except for one inch,and string in elastic or a drawstring. You can also knit eyelets to accommodate the drawstring if you want. I attached D rings to mine and put it on a lanyard (neckchain keyring) that my boss could wear around her neck. You can also attach it to a climber's ring around your jeans belt loop so you don't lose it.
Welsh corgis are cool.