My daughter recently turned 5 and I'm heading into unfamiliar territory. She has started lying; fortunately she's not very good at it so I catch her at it and we talk about it, but I'm not sure what to do. Usually it has been about small things, but yesterday she did something biggish.
We were at a family Christmas gathering and her cousin left a pile of cash lying on the floor. My daughter picked it up and put it in her pocket. In the car on the way home she told me all about this big pile of cash her grandfather had given her, which is when I found out about it. I'm not sure if she knew it was her cousin's or not, but she very deliberately insisted her grandfather gave it to her, even under rigorous questioning.
I wasn't able to confirm with her grandfather that the money was her cousins until after my daughter fell asleep, so I haven't addressed it with my daughter yet. I'm planning on having a long conversation about stealing, how her cousin must have felt when she saw the money gone; the consequences of lying, how I'd like to be able to believe what she says is true but cannot when she lies; and have her draw an apology picture to her cousin. (And obviously giving the money back!)
But I'm not sure what else? I'm not big on punishment, mainly because I don't think it is effective, but the lying is really tough to handle. I know it is age appropriate to some degree, and it's not like she's always untruthful, but I do need to emphasize what a big deal this is.