When my son was three, he said he wanted to read his own stories, rather than having Mom or me do it. My wife bought Teach Your Child to Read in 100 Easy Lessons. I have no financial stake in this book at all... so I don't think mentioning it is against the rules. Anyway, it's about $20 on Amazon.
It takes about 15 minutes a day to do one lesson (phonics based). In a week, he was reading simple sentences. In a month he was reading simple storybooks. We never made it past Lesson 50, because by then he was reading everything he could lay hands on, and that was enough for a three year old.
Now, some people don't advocate early reading for a child. For us, the deciding factor was that he wanted to read. I understand, too, that some kids will figure out how to read later... every kid is different. But I will say this: having an early reader makes lots of things much easier.