nothing wrong with dropping dough on a good backpack, and $40 isn't a lot (my backpack in business school was $80, $60 shoulder bag in college) better off buying one that will last years vs. buying new cheap backpacks every year.
as for clothes, kids need relatively cheap shyt, they mess up clothing and grow out of it too fast. old navy, sales at gap jcp macy's, and target are good enough...if you got patience, i guess the tj max, marshalls, ross is the move but i don't fukk with those stores outside of picking up stuff for the house