I am perfectly willing to dress my children in hand-me-downs and gently used finds... and I pay the clothes forward to friends too... I have found fabulous designer clothing at yard sales, good will and consignment shops for a fraction of the cost of new. I also shop off season sales... heck, I can buy Summer clothes in June and July for up to 70% off... because they're already putting out Back to School and Winter clothes. Patience is a virtue... especially when shopping for kids clothes
Some other great ways to save on kids clothes include shopping daily deal sites and registering for coupons for your favorite store.
My best deal this year came from Black Friday shopping - I got a brand new coat for my 5 year old on Black Friday by combining Carter's 50% off sale with an additional 10% for shopping before 10 am AND a 20% off coupon that they had emailed to me. By the time I was done, the coat, originally marked at $58 was less than $20 for a 3 season coat that had a rain proof shell and a removable polar fleece lining that can also be worn as a separate coat!
Another great idea for both recycling the clothes your child has outgrown and getting new clothes in their size is thredup.com