Donate to charity. We all get those little bags through our doors to fill your old clothes/games etc with, why not donate all the clothes that no longer fit them to your local charity shop, they'll be thrilled and as a thrifter myself I know the baby section us usually rather bare, you could either give away lots or a few really lovely items, all the money then goes to that charity so you can feel good knowing you've spread some happiness :)
What about sewing a special blanket? Piece together a load of vests/sleepsuits and create a kind of mood board blanket, that way you can still keep those items but they're being reused as something else! Or maybe get the grandparents to try it if like me sewing isn't your thing! It's a great memento and can be handed down to future generations too!
We've kept a few special bits of Abbies, the first outfit she was ever in with her hat, her first Halloween costume and her first Christmas outfit too! I think we'll be keeping her first birthday stuff too! It can be hard to part with stuff but it does five you a great excuse to go and buy more bits ;).
What have you done with their older clothes?
