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To create badges in Google Sheets, start by listing the achievements and challenges you want badges for. Begin with a spreadsheet to organize badge titles and criteria; adjust column widths for visibility, align content, and set word wrap. Next, design your badges by visiting drawings.google.com. In the drawings interface, customize the page setup to your preferred size, such as 5 inches by 5 inches. This process allows you to create visually appealing badges for students to earn as they complete various tasks and accomplishments.