Why it happens

Until he's 3 or 4, your child isn't really able to distinguish between reality and fantasy. What that means is that it's impossible for your 1- or 2-year-old to grasp the concepts of lying and telling the truth. His fibs may stem from:

An active imagination: His creativity is developing so much that sometimes he may think that what he believes is the truth. Doesn't everyone have fish that swim in the bathtub with them? Or a princess under their bed?

Forgetfulness: How can an active 2-year-old remember who really had the Teletubby doll first? He just knows he wants it back now. And when you scold your child for the crayon marks on the wall and he says he didn't do it, he's not lying, he's simply forgotten he did it — or wishes so fervently he hadn't, he convinces himself he didn't.

The angel syndrome: A child who recognizes that his parents think he can do no wrong starts to believe it himself: "Mommy and Daddy love me because I'm so good. A good boy wouldn't spill his milk like that. What milk? I don't see any spilled milk!"

What to do

It may seem counterintuitive — after all, you don't want to encourage lies — but the best way to handle this stage is to relax and enjoy your child's tall tales. Highly embroidered fantasies are generally harmless and part of a 2-year-old's normal development. After all, you read fairy tales to your child. Why shouldn't he offer some of his own?

The same goes for imaginary friends. Pretend pals are normal and signal a child's well-developed imagination. Even when your toddler blames a misdeed on his "friend," there's nothing to worry about. From an emotional standpoint, imaginary friends serve an important purpose: "They give a child a safe way to find out who he wants to be."

Though it's not worth punishing your 2-year-old when he embellishes the truth, you can gently nurture his instinct to be truthful in ways that make sense at this age. Here are some strategies:

Encourage truth-telling. Instead of getting mad at your child's misdeed, thank him for telling you about it. If you yell, he's unlikely to feel that honesty pays off.

Don't accuse. Couch your comments so they invite confession, not denial: "I wonder how those crayons got all over the living room carpet? I wish someone would help me pick them up."

Don't overburden your child. Don't weigh your child down with too many expectations or rules. He won't understand them or be able to follow them, and he may feel compelled to lie to avoid your disappointment.

Build trust. Let your child know that you trust him and that you can be trusted. Nothing is more important than making honesty your best policy. It's a parent's job to be a role model of trust. With this in mind, try — when you can — to avoid telling half-truths yourself. For example, if your child's due for a shot at his checkup, don't tell him it won't hurt. (He'll know in a second that it does.) Try to keep your word, and when you can't, apologize for breaking a promise. And best of all, praise your child whenever he tells the truth. (If he acknowledges that he ate the cookie, avoid the temptation to scold him and instead thank him for 'fessing up.) Positive reinforcement works wonders in making him feel that it's worth it to be on the up and up.