There are a few super cheap options for scale lumber, such as salvaging scraps of laminate, or saving popsicle sticks, but the "right" way is to use balsawood or basswood.  They also come in scale for sheet lumber like plywood, or even in carvable blocks.  

They are both relatively soft woods, and in the sizes that scale lumber comes can usually be cut with a utility knife.  In block form, they are fairly carvable with the right tools and will hold their shape better than foam.  They are also easier to paint than foam is.  They look pretty much the same

Basswood is more expensive, however there are times when this is the better choice because basswood is also more flexible.  It is also a harder and stronger wood.  Thin pieces can be coerced into becoming trim on rounded surfaces more easily.  It is also less likely to break under pressure or weight, because it flexes better.  In thicker versions or blocks, basswood requires a saw for cutting.  Generally, scale lumber is the way I use this wood when I use it.

Balsawood is less expensive and more stiff, but not harder.  It simply snaps before it will flex as far as basswood.  It is a very soft wood that is usually kiln dried to get rid of moisture, which makes it really lightweight.  In fact, in the hand it feels similar in weight to blue foam, although technically it is a bit heavier.  In block form it is easily carvable with a utility knife.  It is not as easy to carve as foam, however once carved it holds up better than foam does. 

I have used balsawood as scale lumber, and I have also carved blocks.  I use this for carving instead of foam when the basic shape can be achieved with a saw, and only minor alterations are needed after that, just as rounding edges or a clean grove cut in the surface.  Paint dries a lot faster on balsawood than on foam, so when deciding which to use, I usually consider both speed and durabilty needs.  Another consideration is price.  When I carve foam, it is usually salvaged from a large shop project and therefore free.  When I use balswood, it is a supply that has been purchased.  If I am receiving a lot of money for a design, I lean toward using more high quality materials.  

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