You can absolutely have a budget trip! It might mean some changes to your plans, but you won't feel like you're missing anything, especially if you've never stayed on-site before. We don't have a huge vacation budget, but that doesn't stop us from having fun.
Have you thought about staying off-site? The Wyndham Bonnet Creek is right next to Caribbean Beach but technically not on Disney property. They are a timeshare property with 1-4 bedroom units with full kitchens, several swimming pools, mini golf, and lots of activities. Their shuttles don't run as frequently as Disney buses, but if you'll have a car the parks are very easy to get to. We are paying less than $100/night this September for a 2 bedroom unit. Some people also find fantastic deals on rental houses right next to Disney World. If your parents would go for it, you could possibly find a house (some even have their own pools) to share and use the money you save on the room to spend on food and souvenirs. Go to the Orlando Resorts board here for more advice on booking a room.
We are planning on saving money by eating breakfast in the room almost every day and getting pizza delivery or making an easy dinner or two. We've done this before and budget about $75-100/day for 2 adults and 1 child's food. I have a Target card, so I buy Disney gift cards there to get 5% off. It really adds up. I saved $100 on our annual passes that way.
I buy snacks on sale at home and bring them on our trip. Raisins, Goldfish, granola bars, trail mix, pumpkin seeds, almond/peanut butter packets, applesauce pouches, juice boxes, even candy for DS. We still buy a few treats when we're there, but they are the truly special things you can't get just anywhere. We carry Brita water bottles and fill them from fountains and with the free ice water at CS restaurants.
We do 1 or 2 TS meals a trip, but we'd rather just get something quickly from CS and be back on the rides as soon as possible. If you do a TS meal, I'd choose a character meal that features some characters your girls really love. You won't waste time in line waiting to meet them later on, and time is money, right?
You have a year to plan and save and decide what matters most to you and your kids. There are plenty of Disney budget blogs and the budget board here on DIS, so make sure you use them. You'll have a great time.
