Tell your child stories, some believable and others overly impressive and exaggerated. Ask him to determine which ones are true and false. Ask him to justify his opinion and reward him with one point every time he gets it right. If he fails to spot an exaggerated story, calmly explain to him points that might have shown that the story was false. Take turns and listen to some of his stories. Tell him whether you think they are true or false. Carry on playing until one of you has gathered five points. This helps your kid distinguish truth from exaggeration.
If your child tends to exaggerate stories at a preschool age, urge him to put all these creative ideas onto pictures. Advise that he start a storybook of sketches or buy him a notebook where you write his exaggerated story on one side and he draws the illustrations on the other. If your child is in school, recommend that he keep a diary with all these interesting things that are happening to him or write a book about it. Give your child a creative outlet for his imagination, and he will not feel the need to lie in his everyday life.
Register your child with a theater school or independent drama classes. Encourage him to exaggerate as much as he wants when he is playing a character. Buy him masks and Halloween costumes and remind him that, when he is wearing a mask or costume, he can exaggerate and be someone else. However, stress that when he is not rehearsing or performing, he should be telling the truth and not exaggerating situations. This can help your kid shape his own personality without feeling trapped in himself. It also can help him realize that there is a place for impressing and a place for being who he really is.
In younger kids, the reason for exaggerating stories usually comes from a need to escape the world they are in and go somewhere where everything is possible. In older kids and teenagers, however, the most common reason for trying to impress through their stories is a lack of confidence and desire to be liked and accepted by other people. If you have a very young child, a creative outlet for his imagination, such as writing, drawing, playing and acting, is the most effective way to help him stop from exaggerating stories. If you have an older kid, the way forward is boosting his confidence. Comment on how handsome he is. Congratulate him for something he has achieved. Tell him that his friends are lucky to have him. Encourage him to join a sport's team or subtly push him to take lessons in the performing arts. Any of these activities can make your kid feel more confident and stop the need to impress by telling stories.