When I was a teacher it used to absolutely break my heart to hear my students tell me they couldn’t read (or write). Let me tell you something….kids don’t think those kind of things unless someone has told them that they can’t read!
What we need to do as parents is tell our kids, from the day they are born, that they are readers! I often talk to my kids about reading and how they are readers. I even say things to Baby S like:
“Do you want to read?”
Let’s go read!”
“Turn the pages while we read.”
“Wow! Look at you reading that book!”
“What is your favorite part of that book?”
When my big boys get bored with their toys or want my attention but I’m making dinner I am always telling them that they should go read their books. I always explain that there are three ways to read a book:
TELL the STORY
This is the easiest form of reading for young kids and the one that you probably most often see kids doing. This is where they tell the story out loud because they’ve heard it a million times. This usually happens with books like “The Gingerbread Man” or “The Three Pigs” or others that they’ve heard over and over again, especially if the book has a common phrase that gets repeated over and over.
READ the PICTURES
This is where the kids look at the pictures in the book and tell the story based on what they see happening in the pictures. This most often happens with books they haven’t heard before. Sometimes when you hear kids doing this they will mimic real stories and say things like, “Once upon a time….” or “The end.”
READ the WORDS
Of course, this is the most obvious way to read. Most of our kids won’t become real readers until they are in kinder or first grade. But there may be some books with one word matching a picture that they could actually “read” on their own.
Here is a short (4 min) video of my boys reading. One day I had gotten all new books at the library and while my husband and I were finishing cleaning up dinner, we found the boys on the floor in the front entryway reading and it was so sweet so my husband started recording. Sorry for me in my sweats and the homemade video. 
If we refer to our children as readers and teach them that there are three ways to read a book, think of how confident they will be when it comes time to do the real work of reading!