According to an article I recently read on Psychology Today (here), households spend between 2.1 and 3.4% of their income on clothing. If your income is around $25k, that means $525-850. That's hard to work with once you factor in shoes, work clothes, special occasion wear and undergarments. Here's how we clothe ourselves affordably:
Develop a strong personal style and stick with it. Keeping up with all of the latest fashion trends means that you will be spending a lot of money on clothing and getting rid of a lot of clothing that still has life left in it. Decide what style you like to wear and build a decent wardrobe around that. Each item in your wardrobe will go with lots of other items, so you can put together more outfits.
Think of how and where you will wear an item. Sometimes it's best not to spend a lot on an item if it is going to be subject to abuse. A coworker at a food service job bought a pair of $45 khakis and spilled fruit juice all over the front after wearing them twice. Because I knew that stains would happen, I spent less than $2 on each pair. If, however, you are buying something to wear when you need to make a good impression, such as a suit for a job interview, invest in it.
For some items, you really do get what you pay for, so invest in high quality. Examples are work shoes (especially if you're on your feet all day), bras, jeans, coats, boots and socks. Other items don't warrant paying big bucks if they won't be subjected to wear or won't be worn long: accessories, flip flops and trendy items.
Thrift stores are great sources for affordable clothing. While new jeans start at around $25, I often find jeans for $2-5. An added bonus is that they are already broken in and very comfortable. I also find lots of quirky t-shirts for $1-2. Many thrift stores have color-tag sales when all items with a particular tag color are discounted 25-90% off. I make a point of buying all of my work pants when on sale and usually only spend $1-2. Ask the cashier about end-of-month sales, holiday sales and bag sales for greater savings.
If you must buy clothing new, shop the clearance racks. This is an easy way to save 25-90% on your clothing. Sure, it's a season or two out of style, but if you plan your outfits carefully, most people won't notice.
Create an all-season wardrobe. Many items of clothing can be worn year round, and careful planning means that you need to buy fewer items. A t-shirt can be worn alone in warm weather or over a long-sleeved shirt in cold weather. A pair of leggings makes a short dress appropriate even in fall; you can also wear the leggings under pants in the winter for added warmth. A winter coat with a removable inner lining can be worn from autumn to early spring, whereas a regular winter coat is only useful from November to March.
Seasonal shopping. If your weight stays relatively the same, buy clothes for next year at the end of the season this year. Savings can be phenomenal; expect 75-80% off. Look for winter boots, thick socks, coats, sweaters, long underwear, gloves, hats and scarves in February or March. Buy swimsuits, shorts, tank tops and sandals in September. Sometimes thrift stores have end of season bag sales. You fill a bag of off-season clothing and pay a set amount per bag (often $2-5 for a paper grocery bag).
Alter found/cheap/old clothing. Sometimes you can modify an existing piece that just doesn't work and make something great out of it. A delightfully quirky t-shirt that's a size or two too big can be taken in to make a more snug fit, or turned into a dress. Jeans with ragged hems can easily be made into cut-off jean shorts or capris. You can even find instructions online to make underwear out of old t-shirts (here).
Make your own trashy accessories. If you are crafty, consider every item before you throw it away; you just might have the perfect material for your next piece of jewelry. Magazine pages can be cut and rolled into beads. In high school I used to make necklaces and bracelets out of junk I got at the scrap yard. I've seen earrings made out of pencils and bracelets out of computer parts.
Sometimes you'll find an item that is perfect. It fits perfectly, is comfortable, the color compliments your complexion and it goes well with your wardrobe. In this case it is sometimes a good idea to stock up. For example, if you find a pair of work shoes that is perfect and 40% off, buy 3 pairs.
When it comes to cleaning your clothes, obviously it is better to have an item that can be machine washed rather than dry cleaned. If you do have items that need to be dry cleaned, consider the at-home dry cleaning bags for the dryer. Wash full loads of clothing. Line dry clothing to save on electricity and to prevent excessive wear. Some items (e.g. jeans) don't need to be washed after every wear, especially if it is only worn for a few hours and it's not excessively hot.
Mend everything. Don't throw something away just because it's damaged. It's easy to replace a button (you did save the little button that was attached, right?). Sometimes at thrift stores I find big jars of buttons for $1 and those have saved many items of clothing. If a pair of pants is too long, sew an quick hem to keep it from dragging on the ground. Mend little tears before they become huge gaping holes. Darn socks. Treat stains. Your clothing will last much longer and save you the replacement costs.
For work clothes in an office setting, or other nicer items, shop at consignment shops in nicer neighborhoods. Prices are a little higher than at thrift stores, but the items are of high quality and in good shape. At a consignment shop I used to frequent back in my banking days, the owner would keep an eye out for suits in my size and style and give me a call when something came in.
Look for coupons in the Entertainment book, newspaper, local weeklies, or on bulletin boards for dollars off your purchases. Sign up for mailing lists or loyalty clubs for stores that you shop at; some will send good coupons for your birthday.