Your 5 year old by now, develops the cognitive ability to grasp different meanings, jokes and riddles. When he starts first grade, with the ability to see and understand humour, he is able to make more friends, liked by peers, has high self-esteem and a more positive outlook towards life. By smiling at his own mistakes, he is better equipped to handle teasing and bullies.
What you can do
There are numerous ways in which you can help your child develop the humour ability. Buy or check out age appropriate joke books from the library. Look for jokes and riddles online together. Play the 'Make Laugh' game where every family member takes a turn to make the group laugh by cracking a joke or doing something funny. Watch a funny movie together, rewinding your favourite parts. Above all, model good humour yourself. Look for humour in day to day situations. Any difficult situations, deal tactfully. This way your child gets to see how to handle tough situations as he grows.