What can I do with a favourite t-shirt once it's too small?

Turn it into a favourite face washer or towel!

Cut out the picture and sew onto the face washer or towel.  No need to overlock or hem first, t-shirt fabric doesn't fray.  Just cut out Barbie or The Wiggles (or Thomas the Tank Engine or Bob the Builder or Batman, Spiderman, Hi Five - you get my drift) and use a medium length stitch around the edges. Use a face washer or towel you have (this is perfect for covering up stains).

You can safely send it to day care or kinder and know it won't get lost; after all it's an original and your little person will love their new towel and not miss their favourite t-shirt at all.