You only have to say the wrong thing in front of your 3-year-old once to appreciate what a good little mimic she is. A 3-year-old is a perpetual student, learning just by observing and listening to those around her, for better or worse. This is one of the main ways your toddler increases her vocabulary, so it's up to you provide the right lessons. Those words she's learning will also be important for decoding (sounding out) words and reading comprehension
Read to your child. This is one of the best ways to help him improve his vocabulary. He hears you reading fluently and will retain many of the words in the stories, especially when you read them over and over again. Keep this benefit in mind when your toddler begs you to read his favorite story every night for two months. To add variety, read some nursery rhymes or sing songs to your child. Hearing rhyming patterns and words set to music may help him retain them more easily.
Maintain a literacy-rich environment in your home. Keep a variety of books on hand that your child can access easily. Although not many 3-year-olds are proficient readers, they can remember simple words just by seeing them often in print. Even books that contain mostly pictures are good, because you can use words that describe them. Your child will hear these adjectives and begin to connect them to specific things. For example, when looking at an animal book, tell your child that the elephant is huge. If you use this word to describe other big animals, your 3-year-old will associate big things with "huge" and will add this word to his vocabulary.
Communicate and interact with your child. Speak in complete sentences and use regular conversational words. Many parents think that simple phrases or one-word answers are appropriate responses when talking with 3-year-olds, but they need to hear words that are more complex so they can add them to their receptive vocabulary.
Play games with your child. This is probably the most fun way to help improve her vocabulary. Young kids enjoy pretend and make-believe, so have a tea party in the playroom. Talk to each other with toy phones. Discuss your day or pretend to be characters from a movie or book and talk about what happened to you in the story. Take advantage of this time to interject a few new words, and don't be surprised if she does too!