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How do award charts work?
For an award chart to work the child has to be old enough to identify and understand whatever symbols are used on it. Smiling faces and stars are perhaps the most commonly used symbols. Before you start using one, find several ways to show your child what they mean. “Whenever I put a smiley face up on your chart, it means you have done something you should do. For example, every time you use the potty, I’m going to put one on your chart.”

But remember that smiley faces and stars don’t mean anything until they are traded in for some kind of reward that a toddler understands. That is, they stand for tangible rewards, just as a bank check stands for a certain amount of money, which in turn stands for food and other desirable items. So you need to let a child know that when a certain amount of stars are on the chart he or she will be rewarded with an ice cream cone, some time at a favorite park, a wagon ride or another special treat.

Incidentally, most people feel the symbols should be used only for positive behavior. If you have a system in which symbols are removed for negative behavior (aggression, tantrums, etc.), children often get angry and upset over losing rewards for good behavior they legitimately earned in the past.

Now for a personal opinion. I doubt that a chart would be very useful with a toddler. I think you would do better by remembering to praise positive behavior and offer a tangible reward for an accumulation of such behavior.
Dr. Bettye M. Caldwell Ph.D. Professor of Pediatrics in Child Development and Education