In regards to this matter, the concept of passing clothes is cost-effective. Instead of buying new clothes that your child will undoubtedly outgrow rather quickly, hand-me-downs could be the best solution. They are often in good to "like new" condition and will save you a lot of money.
In my family, when my cousin's son outgrew his clothes, they were passed on to my son. Then once he outgrew them, I passed them onto my brother's son, and my brother later passed it to my sister's son.
In the event that there isn't anyone else to pass the clothes onto, I would suggest donating the clothes to a local charity to help out the less fortunate children in your community. My son always feels good to know that by donating his clothes to charity, it is helping another child.