Hi Michelle!
Congrats on your upcoming 1st trip! For those fortunate, Disney is definitely something to do at least once in your lifetime...
For a family of 4, it's not a stretch to say you can spend $500+ just on souvenirs alone...Unlike off Disney premises, you're not going to find many marked down items in the Parks, resorts, etc. You also have to think of any special experiences you may consider (boat ride anyone?), and tips, which isn't included in the Dining Plan.
What my wife and I do is we'll purchase some Disney items BEFORE the visit, things like apparel or souvenirs from off-site locations that sell Disney licensed apparel like JC Penney or Target. Then, we find a way to "surprise" them with some of the things we bought. It'll save you money, and relax your wallet some from the temptations at the various Disney shops (and believe me, you will be tempted at every turn :-)
So, think of some ways you can save a buck, but $500 minimum is a moderate estimate for your first trip.
Have a magical time!