I'm late to the party on this -- I just found the site last week via Lifehacker -- but I'm surprised that cloth diapering isn't mentioned here. I cloth diapered my son and am switching my 3-week old daughter to cloth now that her bellybutton has healed. Cloth diapering is incredibly frugal, especially if you have more than one child, and there are diaper services out there that will take care of the dirty work for you at a much lower cost than disposables. I wash my own, however, to minimize the environmental impact.

Also, and I think this goes without saying, breastfeeding is not only good for babies and moms, it's good for the environment and the pocketbook. Even off-brand formula is $15/can, and if you invest in a good breast pump (i.e. Medela's Pump in Style, $250) it's even possible to "breastfeed" your baby while you return to work. My friend gave her son expressed milk exclusively by pumping until he was eight months old, saving herself hundreds of dollars in formula. Not everyone is able to keep it up that long, but even nursing for the first six weeks will save a family a substantial amount of money.

I used a lot of these suggestions with my first child, and can attest to their effectiveness -- making your own baby food, for instance, is awesome. I would add to that, don't buy a freestanding highchair when a smaller one that straps to a kitchen chair will do -- and save space for those who (like us) have downsized to save $$ even as our family has grown!

The last thing I would suggest is to invest in a convertible car seat that takes your child from infancy straight through grade school. As child seat laws grow more stringent, parents are having to spend more and more on booster seats -- my state, for one, requires boosters for kids up to 80 lbs. Our son's seat converts to a booster that will take him all the way up to 100 lbs, so even if the laws change we will be covered. Now the only question is...will he let his sister use it when the time comes?