We love to travel with our two little guys (and I say two because Ethan has already been on his first vacation - at 6 weeks old). The problem is that because we like to travel we have to find ways to do it on a budget allowing us to take additional trips throughout the year.
Traveling in the off-season can be an easy way to cut vacation costs. In most cases you will find that hotels are much cheaper and at times local attractions are too. Unfortunately this is a tip that becomes more difficult to follow as your children get older and get into school and other activities but you will see that I do have some "off-season" tips for parents of older children too.
If you children are still young and you are not forced into traveling with every other family in the US during school breaks, avoid vacationing during those weeks at all cost. Not only will the hotels be packed and VERY expensive, but you will find that the local attractions will all be packed as well. If you can avoid these times you will find that you can get deep discounts on hotel rooms and will have more fun at less crowded attractions. For example, we went to the Great Escape Lodge (keep your eyes open for more on this hotel and our vacation there), near Lake George NY the first week of January this year. We paid just over $100 per night, including the indoor waterpark. We had looked at that resort last summer and would have paid about $300 a night, I have a co-work who went between Christmas and New Year's (the week before we went) and spent over $400 a night. Why did we get such a good deal? This is a vacation geared toward children and they were all just going back to school after the holiday.
Take advantage of the time before you children go to school and travel as much as possible during these times you will find great deals and less crowds.
Now, if you have older children you can try plan trips to places that are traditionally "cold weather" vacations during your children's summer break. Or during their spring vacation go to a place that would typically be viewed as a summer destination (Newport, Rhode Island or Cape Cod for example). We have traveled to both places during April or early May and find great deals. We get hotels for nothing and if you can wait until the last minute to plan it, you can also make your decision based on expected weather. You won't be able to go to all the fun little shops - but face it your children don't want to do that anyway. Another good option for "off season" travel is Burlington, VT (a ski destination) during the summer. Most people with think of this destination for a winter vacation, but some research will tell you that there are plenty of things to do with the family in the summer as well.
A little planning for your vacation will save you a lot of money and hassle in the long run.