Studies have shown that children have an easier time reading words that they already know than words that are foreign to them. In addition, the more words a child knows, the better she is able to comprehend what she’s reading. So, it seems to follow that building a child’s vocabulary is an extremely important part of early literacy.
Reading to your child often is one of the best ways to improve vocabulary (and I’m not just saying that because I’m a librarian! :)). Once you come across a word that your child doesn’t know, you can help her learn it by, first, defining the word, making sure to use simple terms that your child will understand. Next, give an example of how the word is used. Then, ask your child to come up with her own example. Finally, you can reinforce the new knowledge by using the word often in the days and weeks after your child has been introduced to it.
Making a conscious effort to help boost your child’s vocabulary at a young age will undoubtedly help her when she begins to learn to read and well beyond.