When I was a child, my mother sewed the majority of my clothes -- I was a very well-dressed child! She did it because she enjoyed it AND because it was cost-effective. She taught me to sew, though I never enjoyed it as much as she did.
I assumed I'd do the same thing when my children were born . . . nope. I learned quickly that I could buy the same items for a fraction of the cost of sewing. Since I personally do not enjoy sewing, I don't do it. I admire my friends whose children show up on Easter Sunday wearing matching dresses with hand-done smocking, but I have no desire to put the time into it! It's not fun for me.
However, I can pass on a few hints on how my mother did it cost-effectively. I think it is more expensive today than it was back then, but some of these hints can help:
Buy a basic pattern and use it over and over. The same dress can look different if made once with sleeves, once without sleeves, once with a solid, once with a bold pattern.
Use your own existing clothing as a pattern -- lay it down and cut your cloth a little bigger than the item (to allow for seams). This, of course, isn't for beginners!
Buy fabric off the dollar table. Or cut up old adult clothing items (which could even be purchased used at Goodwill) to make shorts or children's clothes.
When you're discarding an old shirt, cut off the buttons and save them. You can use them on something new that you're making later. You can do the same with zippers, but it's a good bit more work.
One last comment: While sewing from scratch isn't really cost-effective in most cases, MENDING can save big bucks! Everyone should be able to hem a pair of pants or a skirt, and everyone should be able to fix a split seam! There's no need to pay people for these simple tasks.
or will be able to express her creativity on a plain store bought item that she can use as the basis for embellishments. 
