First, cut off the selvedges on both edges of each piece of fabric (these are the tightly woven edges along the long sides of the fabric). They are sometimes woven more tightly than the fabric in between and can distort the fabric, so it is better to discard them before sewing. Then, cut your fabric pieces into squares of the same size, making sure the edges are all straight. You can check how square your fabric is by folding it diagonally into a triangle. Don't fuss too much about this, a half inch here or there won't affect the finished product too much. The important thing is that both layers of fabric are exactly the same size and shape.
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Pin your cut fabric squares together with the right sides facing. The best and easiest way to do this is to first pin all of the corners. Then, turn one side so it is facing up and, working inward from the left and right corners, pin toward the middle of the side, alternating as you go (the order is shown in my sad little drawing to the left). This keeps the fabric layers evenly matched and helps prevent it from stretching. Repeat this on the remaining unpinned sides.
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 | | Here is how the blanket will look after it is all pinned together.
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 | | Now you are ready to sew. Using a 3/8 inch seam, sew all around the edge, leaving a six inch opening for turning the blanket. Be sure to backstitch at the beginning and end of the seam to reinforce it at the opening edges.
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 | | This is how the opening should look after the seam is sewn.
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 | | After sewing, trim loose threads and clip the corners as shown here.
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 | | Before turning the blanket right side out, press one side of the seam flat as shown here. This is the next best thing to pressing the seam open and makes pressing the seam open from the right side easier.
You can also see how the trimmed corners now lay flat because the excess was trimmed off.
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 | | When you reach the seam opening, press both sides of the seam open so that the edges will match when the blanket is turned. This is a little trick that works especially well on items that are going to be stuffed like pillows or softies.
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If you are interested in making other baby gifts, these books are full of wonderful ideas (I love Oliver + S patterns)!:
