Here is the system we have been using in our family for ten years to manage the clothing our children aren’t currently using. It has proven it’s worth over and over!
Step 1: Buy sturdy, reusable bins and find a place to store them.
We use these 18 Gallon Rubbermaid Totes. We’ve been using them for about ten years now. I forget how many we started with, but we have bought more over the years as needed.
You don’t need a huge storage space. Our storage space is an 8 foot crawl space, but you could use a wall of your garage, carport, or even a closet.
Step 2: Gather all the unused clothing into one place.
For us, this means our front deck on a warm day. My children hauled up every single clothing and camping bin from our storage area.
We do this every spring and in fall. We get clothing from the bins in between seasons (if a child needs an item of clothing we check the bins before purchasing) but twice a year we sort and organize everything. This way I see who needs more seasonal clothing (shorts in the summer, etc) and in what sizes.
Step 3: Take out and examine every piece of clothing.
I know this sounds tedious, but it really doesn’t take that long. We start with one bin at a time, have kids try on clothes, decided what we are keeping out for the new season and what goes back in to the bins. I try to only put clothes in good repair and stain-free into these bins, unfortunately, it seems I always pull out a few items that are now stained. These get used as rags or passed to Goodwill, or repurposed in some way.
Step 4: Number the Bins and Keep an Inventory!
The reason for numbers is, it makes it easy to switch up contents in the future as the contents change. Instead of writing “boy’s shirts” write a number and number your inventory. I promise this will pay off in the end!
I have both a hard copy (in our household notebook) and one in the notes section of my phone. Our categories are things such as:
1. boy’s pants sizes 8-12
2. boy’s pants size 12 and up
3. pajamas
4. girl’s shirts…you get the idea.
Apollo has his own bin, since there is such a large age gap between him and Tucker.
This system has worked so well for us, that I have been able to grab a bin of church clothes and locate a new pair of pants for one of my sons in less than five minutes! I’ve done this more than once on a Sunday morning when a child has suddenly outgrown something. 
Step 5: Line up the bins and return the “keepers”.
It is a good idea to have a box or bag for clothing you aren’t keeping.
{I threw this next photo in because let’s be honest, any picture is cuter with a toddler sporting an afro.}

Step 6: Return the bins to their home.
Sorry, there was no way to make this picture “pretty”. Our storage space is small and this is the best I could do for a photo.
We stack the bins two high. We could go higher space-wise but I wanted to keep the clothing easily accessible. It is no problem to move one bin to check the one underneath, but I knew anything beyond that would be tedious and was not likely to be kept up.
How about you? Do you have any “secrets” for clothing management?