If you haven't yet identified a good kids' resale shop in your neighborhood, hop to it. Used kids' clothing is the surest way to stretch your sartorial budget.
Find a shop you like
When evaluating a resale shop, check out the clothes for sale. Are the brands reputable? Are the clothes in good condition? Is there a decent amount of traffic in the store, ensuring regular turnover? You're likely to sell and buy at the same place (you often get more in trade-in than in cash), so be sure you're happy with the selection. Is the person at the counter nice? This last detail counts: you'll be doing business with this person on a regular basis.
Once you've discovered a shop you want to work with, you'll most likely need to make an appointment to sell your clothes.
Preparing castoffs for sale
Those grubby duds languishing in the laundry room need a spruce-up before you offer them for sale. Skip this step at your peril: spending a bit of time on presentation will net you more $.
First, sort. Unless the piece is unique (baby Prada, for example), don't try to sell stuff that's ripped, stretched out beyond reasonable wear, or is otherwise past its useful life. Donate or trash this stuff. If you find something that's in good condition but is stained, wash it as described below and see how it comes through.
Next, wash, dry and fold. I treat all stains (I like Zout), then soak everything overnight in a bucket of hot water to which I've added some color-safe bleach (I like Biz). You'd be amazed how many old stains come out with this treatment (I may have to make the Zout-Biz presoak its own hack, come to think of it. Thanks, Monica, for the tip.). Then, I wash and dry everything, with fabric softener. I take everything out of the dryer while still warm and fold carefully. No ironing, unless something is unpresentable without it. If you have time, mend little holes and reattach buttons. Separate boys' and girls' clothes, and stash neatly in a bag (a nice department store shopping bag works perfectly).
The big day
Come to the appointment on time, and be prepared to be friendly and patient. If you can, consider coming on your own. There is often only one person at the counter manning the cash register, helping customers, and evaluating your stuff. Although there will probably be toys sitting around for your kid to play with, you'll feel addled and rushed if you end up having to wait.
Once the clerk begins examining your stuff, browse the store. He or she knows what sells, and will only choose the items that will move. Items that sell best: boys' pants, good quality boys' shirts, winter wear, famous labels.
Once the clerk is finished, he/she will likely offer you a trade value and a cash value, with the trade value being 10% or 20% higher. If you find clothes you like while browsing, go for the trade. You will be able to "bank" the balance with the store and use the rest (or cash in) later.
Don't be surprised if you leave the store with some of the clothes you came in with. No matter, just stop off at Goodwill on your way home.
Related: Avoiding bed bugs in used clothing