RAW files are huge.
Actually RAW files are not much larger than the highest resolution JPGs coming out of your camera.
The beauty of RAW files is that you can alter the sharpness, brightness, contrast, white balance, shadows, highlights, and cropping non-destructive. The "recipe" is stored in the RAW file and applied in the software that handles the RAW images. You simply export to JPG and into Photoshop to apply any destructive effects you want on the image.
One of the first rules I learned was to ALWAYS shoot at your camera's maximum resolution. You never know when you will snap that perfect picture you wish to print at 8.5x11 or larger. If you only have the picture in a smaller resolution you would be pretty mad.
Memory, HD space, and backup schemes are so inexpensive today.
I just bought a 1TB USB2.0 drive for backups. I've been shooting 10MB RAW files for the last two years and have accumulated around 200gigs of images. That 1TB drive should last me a good three or four more years.