We are a family of six also - 2 in diapers and a third one who still wears nighttime pull-ups. We range from spending as little as $300/month to $500/month depending on stockpiling. This month we spent closer to $500, but I won't be spending very much next month, maybe even less than $300 as we work through what we have.
Some things that have helped us cull our budget from around $700 (before ds was even born) has been:
1. Aldi's, Big Lots, Dollar General for our can goods and other staples
2. Scratch cooking has been one of the biggest dollar savers, period. And the family likes it better. We don't buy snack foods anymore - we will make pudding from boxes that I find for .30c or less, bake cakes, brownies & cookies from scratch. We also eat a lot more fresh, seasonal fruits & veggies for snacks (where I am willing to spend some money).
I've checked out cookbooks from the library, even some of the fancy ones, and have found many recipes that can be made cheaply within them. The Italian cookbooks are great for making dishes that go a long way for little money.
3. Buy Manager Special meats. I have found out when the local grocery stores do their big mark downs on meat. For example on Wednesday's if I my meat supply is getting low I will run by the grocery store and check what they have on special. These are the meats that generally need to be eaten or frozen within 24 hours. I have never had a problem with any of it, and the grocery store will still refund if something is found to be wrong with it. This way I have gotten packages of chicken legs/thighs for .99c, that is for the package not per pound, roasts for $5 or less, 2lbs of 80% lean ground beef for $2.00, etc.
4. I try to find ways to cook one type of meat and use it at least three ways each week. The crockpot is a huge help with this. Example would be cooking a roast in the crockpot for dinner one night. The next night I might take the leftover roast and shred it, cook it with some taco seasoning and mix with white rice and cheese. The leftovers from that would be used in rice & bean burritos later in the week. Tonight I am roasting a chicken, tomorrow night we will have chicken tetrazinni and will make two pans of that (one to freeze), I should have enough meat to also have chicken quesadillas later this week. This is from a 5lb chicken I picked up for less than $3.00
5. Reduce the amount of meat in any dish. Replace with veggies or add more pasta. My kids are not big meat eaters, so we have meat for flavor in alot of dishes, but they are not the 'main' course.
6. With a family this size and scratch cooking it makes sense to pick up some of your staples from a warehouse store. But do check the prices, Aldi's is cheaper on some of them. But I have found milk, eggs, cheese, Flour, pasta and meats when I can't find much on manager special other places to be good deals.
7. Replace as many paper products with cloth. A roll of paper towels will last our family more than 2 months. I've just had to train the kids to clean up their spills with dish towels instead.
8. Buy generic. I really don't worry about the name on the label too much, unless it is a brand I won't buy for personal reasons. I save alot of money on formula each month because we buy store brand formula at less than half the cost. These formulas have to meet the same, strict FDA guidelines and inspections.
9. I switched to cloth diapers just recently so we are still recouping the start-up cost on that. But, I believe that it is going to be so worth it in the end. The 2-yr-old is wearing training underwear, but if we go out for long periods is in pull-ups. I will only have to buy one package of diapers per month for each child.
A $400 budget may still sound to high to some, but it is $300 less than before. I'm hoping it will go down more over the summer as we move to a seasonal/local diet and eat more out of our garden.
