I have gone this route myself mate. I went to the craft shops to save money. I picked up lots of what I considered to be big bargains.
The problem was that most items you will buy there will not be waterproof. Having coloured dye pooling around your fishing flies may or may not attract fish, but will certainly not be popular with fishery managers!! When your fly is removed from water, instead of a beatiful red and yellow creation you will end up with a dirty grey mess.
I also had same problems with foam to a lesser extent. My problems with that was the amount of water it absorbed. It was like a sponge and a floating fly became a sinking monster.......
Best regards and tight lines
Mick Porter