Step 1: Materials and Supplies
A toddler-size T-shirt (mine is a 2T)
small wooden purse handles
fabric for lining the bag (amount depends on the size of your shirt; 1/4 yard was plenty for mine)
fabric for making a pocket
featherweight iron-on interfacing (enough for the inside of the shirt, half the lining, and the inside of one sleeve)
coordinating sewing thread
a ruler for measuring and using as a straight edge
a pen or tailor's chalk for marking the fabric
You will also need an iron, ironing board, and sewing machine. Bonus points if you have a zipper foot for your machine.
Tips: Before starting, remove any cloth tags from the inside of the shirt. Fold and tuck your shirt to find the final shape and size and test it with the handles.