Something I hear a lot when talking with people about sewing... is "I used to sew a lot but I don't now because it doesn't really save me money." I'm here to tell you that it really is possible to save money sewing clothing for your family!
A few things I do that help me save money sewing for my kids and self:
I buy much of my fabric online, and I use coupons and shop the sales at the local fabric chain stores. I buy almost all my knit fabrics online because any knit fabrics available locally are usually too expensive or not the fabric content I want.
I keep some fabric on hand, and although I don't have a huge stash, right now I'm glad to have several colors of denim that I can use to make shorts or jeans for my boys when they need them.
I sew my children's pajamas. I make them flannel sleep pants in the winter, and light cotton woven shorts in the summer. They wear store-bought or made-by-me undershirts with their sleep bottoms. I like doing pajamas because they are just about the easiest project out there, so it's kind of instant gratification. I love having a finished project after about 20 minutes of sewing. Another reason I like sewing pajama bottoms is that I love all the fun prints that are readily available in flannels and cotton wovens. I definitely spend less to make these pajamas than I would and have in the past when I have bought pajamas for my kids.
All that said, saving money is not the main reason I sew for my kids. I sew because I enjoy it, I sew because I like the challenge of trying a new pattern or technique (or the challenge of fitting patterns for myself, which is the biggest challenge of all), and I sew because I feel like I put a little bit of my energy and love into the things I make for my boys. I also like the feeling of accomplishment, and of having made something cool looking and useful, that I have when I finish a garment and then again when I see my kids wearing it.