If you have friends with older children, let them know you would like their hand-me-downs (as a thank you, it might be nice if you bought them a gift card occasionally for a clothing store they use). Also, don't just buy clothes only in your child's current size at yard sales and charity stores. Keep boxes labelled with the size of clothes and store them, by size and season. The large boxes for computer paper work great for storage and often get thrown away by businesses.
Another idea is to have a swap party. Invite your friends to bring their children's clothes that no longer fit and do an exchange.