This video from "Whitney sews on a budget" shows how to make a Valentine's Day purse or gift bag using a bandana. Begin by folding the bandana in half on the diagonal with the right sides together. Cut it into the shape you would like your bag to be. Pin the pieces together and sew along three sides and turn right side out. Clip out notches from each side so that there will be openings on each side of the casing that you are about to make. Fold the top down about an inch and iron, then fold down again and iron again. Sew across each side to form a casing. Thread two ribbons through the casing, one in each direction, and tie closed on each side to form the closure to the bag.
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