These things are awesome. And SO incredibly easy to make. I've made them for friends over the years and now I had the chance to make one for my little munchkin. (Side note: There is a company that makes these and has a trademark on the name "Taggies", so from here on out, we'll be referring to this as a "tag" blanket instead. And I've heard of many a DIYer getting a cease-and-desist for selling them, so let's just keep this to a make one for yourself/gift operation, ok? Ok.)
If you want a step-by-step tutorial, follow this link here. The only small change to this tutorial is that I double top stitch the blanket after turning it right side out. I like the way it looks and gives some added stability to those ribbons.
Tag blankets are designed to be either baby lap size or even smaller. I tend to make them around 12x12"-ish. Again, nothing about this is rocket science. Just adjust as you see fit. Use whatever ribbons you have on hand (as long as there's nothing that can peel off and/or pose a choking hazard. Babies like all different textures, patterns, and colors of ribbons so go hog wild! Their little hands (and mouths) have a field day with these things.
For this one, I used some flannel (always prewash your fabric!) that I picked up on clearance years ago and some ribbons from my stash. Total cost to me now = zilch ("Taggies" brand blankets tend to run $10-20 depending on the store and the size). Moral of the story - I'm sure you have bits of fabric and ribbons here and there that you could put together to make one cute little tag blanket. And the whole project takes like 30 minutes, maybe. Whip up a couple extra while you're at it and you've got some upcoming baby shower gifts covered. Whoop whoop!