I agree that making your own food and cloth diapers are cheaper, but if she is a busy mom, sometimes they aren't worth the headaches. Look for coupons and save money on diapers. They have a ton of them available. If not, generic or store brand diapers from Target or Walmart work just as good as Huggies or Pampers. Buy baby clothes at garage sales, thrift shops, and second-hand stores. They are much cheaper this way.
There are a lot of good suggestions already given. I think that the comment about saving up receipts to really make an impact about cost could be helpful. It can also be valuable to only shop using cash. It is much harder to see the value of money when we use debit/credit cards to purchase, swiping makes things too simplistic. Setting a cash budget and having your sister follow through with it can be a great strategy for teaching the value of money. You may want to start small, such as just cash for clothes or something. People are more likely to be conscious of their choices and the money they are spending when they are holding and looking at real money and not a plastic card.
