I like to buy clothes for my kids in advance, when they're on clearance at the end of a season. There are two important things you need to have a handle on to be able to do this effectively.
The first is that you need to have some idea of what size your child is going to be when that season comes around again. If your child is pretty average, you can go by the age/size. For example, one year from now a six month old might wear 18mo size clothes. Where this doesn't work so well is if your child is a lot smaller or larger than "average." It's difficult to tell before your child is born or even when they're small where they're going to fall when they're older but as time goes by you get better at it. One way to get around this pitfall is to buy clothes that could work in multiple seasons. Short sleeved shirts and pants of most kinds work year round. I really love pants that have adjustable elastic waists. My oldest is tall and skinny, so they have been a necessity to get pants that are long enough to not fall down. Those kind of pants can be adjusted as the kid grows so he or she can wear them longer. Sadly, they don't seem to make adjustable waist pants in infant sizes (at least I haven't found any until the toddler sizes, yet!)
I often buy certain items (like dresses and t-shirts) in a slightly larger size for my girls. Since they're on the skinny side, they can often wear them for more than one year. A red sleeveless Christmas dress with a santa-ish coat got worn for two Christmases as well as during the summer without the coat. The downside to doing this is it makes the outfit more worn out and if you're looking to have hand-me-downs for younger siblings it makes it a little harder.
The second thing you need to make buying kids clothes in advance work is some place and some way to keep the clothes organized. If you forget you have them (and it's really easy to do!) and go out and buy more stuff, you haven't saved any money. If you don't find them until your child has outgrown them, that is just a waste. I have seen in catalogs little tags you can buy to stick on a clothes rod to demarcate areas for different sized items. Some stores give you the hangers the clothes were on and they have little tabs that indicate the size (not always the correct one though!) I suppose you could even make your own way to indicate which clothes hung on a rod are which sizes. I don't hang up clothes that my kids aren't wearing because I don't have that much closet space. What I've done is group similar sized items in cardboard boxes. Diaper boxes work well! I write on the outside what size(s) are in that box so I can tell quickly what's inside. I divide up clothes in sizes that the kids is going to be wearing soon by season. I keep the boxes of clothes that are going to be worn soon in the closet. Clothes that aren't going to be worn for a while (and this would be mostly for hand me downs since I don't buy stuff for really, really far in advance) go some place more out of the way. I keep a basket in the closet to collect clothes as they are outgrown. When the basket starts to fill up, or when it's time to switch out clothes for a new season, I box up the out grown clothes. When I switch out clothes for a new season, I keep any items that may fit when the weather changes again with the box of items in that next size/season. I only have to do this a couple of times a year, but it is a very good thing to do before you go out shopping for more clothes. Knowing what you have makes it easy to see what if any items you still need. Having at least some clothes already for when the weather changes gives you some time to wait for sales on other items you might need.