Using a Rectangular Towel
Fold 1 of the narrow edges of a rectangular towel over 2/3 of the way. Choose a rectangular towel and spread it on a flat surface with 1 of the long edges facing you. Take 1 of the narrow edges and fold it just past the center, about 2/3 of the way. Double-check your proportions by folding the towel into thirds, then unfolding 1 of the ends. If this is for a baby shower, match the color of the towel to the gender. If you don't know the baby's gender, use a neutral color, such as yellow. A solid color will work the best, but you can use a print too, such as paisley.
Roll the top and bottom edges towards the middle. Take the top edge and roll it towards the middle of the towel. Weigh it down with something, like a cellphone or a book, then roll the bottom edge towards the middle too. If your towel has a tag, make sure that it is inside the towel as you roll it. Don't cut the tag off, otherwise you won't know how to wash the towel later. Roll as tightly as you can. If the towel is too loose, the bear won't hold its shape.
Flip the towel over and find the center. Make sure that the smooth part of the towel is facing you. The crease created from when you rolled the towel should be in the back. Find the center by folding the towel in half or just eyeballing it.
Twist the thicker end so that the crease is visible. You may notice that 1 of the ends of your towel is thicker than the other. This is from when you folded the towel over. Keep the thicker end in your left hand and the thinner end in your right. Twist the thicker end so that the crease caused by the rolling is now in the front. This twist is important, as it will bring the rolled part of the towel to the front and create the bear's legs.
Fold the towel in half about 3/4 of the way. Take the thinner end and fold it over onto the thicker end, about 3/4 of the way. How much you have sticking out from under the thinner end depends on the size of the towel. The larger the towel, is, the more you'll have sticking out. Don't fold the towel exactly in half. The thicker end of the towel needs to stick out from under the thinner end in order to create the legs.
Unroll the thinner end slightly to make the arms. The thinner end of the towel that you just folded over should still have the crease facing you. Unroll the edges of the towel so that they fall to the sides of the bear. This will eventually create the bear's body and arms. Keep the ends on the thicker end of the towel tightly rolled. They may come loose during this step, so be careful.
Wrap a rubber band around the towel to create the bear's head. Place the rubber band about 1/3 of the way down from the folded end of the towel. Wrap the rubber band 2 to 3 times around the towel so that it cinches it tightly and creates a "neck." If this is for a baby shower, consider using a hair tie instead. This way, the mother can reuse every portion of the gift. The color of the rubber band does not matter because you will be covering it up.
Slip 2 mini hair elastics over the top 2 corners to create the ears. Do not wrap and twist these elastics, or they will cinch the material too much. Simply slip a mini elastic over the top right and top left corners of the teddy bear's head. Try to use clear elastics, if you can. This way, they won't be visible on the finished bear. If you can't find clear elastics, you can use colored ones. Try to match the color to the towel.
Wrap a ribbon around the bear's neck. Choose a ribbon color that goes well with your towel. Wrap it around the neck of the bear to hide the elastic, then tie it into a bow. You don't have to use the same color as the bear. For example, if you made a white bear, try a pink ribbon. Cut the ends of the ribbon into angles for a nicer touch. Use a thinner ribbon for a smaller bear and a wider ribbon for a larger bear.
Using a Square Washcloth
Roll the side edges of a square washcloth towards the middle. Take the left side edge and roll it towards the middle of the washcloth. Weigh the rolled washcloth down with something, like a cellphone, and roll the right side towards the middle too. Make sure that the tag is inside the washcloth as you roll it. You can also cut the tag off, but it's best to leave it on if this is a gift so that the recipient knows how to wash it.
Flip the washcloth over. You should now see a smoothly-rolled washcloth without a center crease. If you can still see the 2 ends rolled towards the middle, you are on the wrong side. Flip it over!
Fold the washcloth in half about 3/4 of the way. Take the left end if the rolled up washcloth, and fold it towards the right end, about 3/4 of the way. The front of the washcloth will have the rolled ends visible once more. You'll have the smooth side of the wash cloth peeking out by about 1 to 2 inches (2.5 to 5.1 cm). The shorter front half will create the body and arms of the bear. The longer back half will make the legs. Don't twist the towel as you fold it.
Unroll the sides so that they cover the legs. The side edges that you rolled towards the middle should still be visible on the front of the washcloth. Unroll these slightly, so that they land on the sides of the rolled up washcloth tube. Hold your washcloth teddy together at the sides.
Wrap a rubber band around the neck of the teddy bear. This should be about halfway down the front of the body (excluding the legs). Depending on the side of the washcloth and the rubber band, you may have to wrap the rubber band 2 to 3 times to ensure a tight fit.
Tie small elastics around the top 2 corners for the ears. Take 2 mini hair elastics, and slip 1 over each top corner on the teddy bear's head. Do not wrap or twist the elastics; the elastics will have enough strength to stay on the washcloth and cinch it into shape. For best results, use clear elastics. This way, they won't show up as much. Use your fingers to sculpt the ears into shape. Make a small dip in the center of each ear, just like a real teddy bear's ear!
Tie rubber bands around the feet, if desired. Right now, the legs look like 2 rolled up tubes from the front; from the back, they are a solid piece of washcloth. For a more realistic teddy bear, wrap a small hair tie around each of the 2 bottom corners. Pull the hair ties as far up the body as they can go. You may have to wrap and twist the elastics in order to get them to stay on. Don't wrap and twist them too tightly, however.
Tie a ribbon around the bear's neck. Cut a piece of ribbon that matches your washcloth. Wrap it around the bear's neck, then tie the ends into a bow.
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