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Decide what you can afford to spend on the party. Stick to it.
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Pick an inexpensive location. Parks and backyards are great for warm weather; inside the house or a public building (church, fast food restaurant with play land, etc.) for cool weather.
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Invitations: Handwritten or computer-generated invitations work well and add a personal touch to the party. If you like, you can even give them out by hand and save a few dollars on stamps. Or, if your child's friends (or their parents) all have e-mail addresses, consider using an online service such as Evite.com.
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Food: Try to make as much of the food yourself as you can, even if it’s not fancy. This includes the cake, if possible. Enlist the aid of grandparents, family members. Purchase any premade foods in bulk, and remember that kids are usually happy with inexpensive foods like hot dogs and pasta salad. Have plenty of snacks such as goldfish crackers and pretzels on hand, too.
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Beverage: Serve juice, punch or soda from large bottles, rather than offering individual containers or juice boxes.
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Games: Play classic games such as Red Light, Green Light or Hide ‘n Seek. For games with “props’, see if you can make any of the components yourself. Prizes for preschoolers are not necessary; if desired, consider offering a “service reward” such as allowing that child to pick their goody bag first, have the first piece of cake (after the birthday child, of course!), etc.
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Entertainment: Expensive, expensive! Consider having Dad or Grandpa dress up as Elmo if you need to have this!
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Make a pinata yourself instead of purchasing one. See www.e-how.com Fill it with inexpensive treats sold in bulk.
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For theme parties, choose a few paper goods to purchase in the (expensive) print and then fill in the rest with coordinating solid-colored paper goods. Same goes for balloons – pick one or two mylar ones and fill in the rest with less expensive latex ones.
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Try incorporating some items you already have on hand as part of the decorations instead of purchasing (expensive) party store decorations. Not everything needs to come from the party store so think outside the box and be creative!
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Use paper lunch bags as goodie bags. Decorate with stickers or rubber stamps. Or have the birthday child decorate them for his friends.
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Pick a few areas to splurge for those “must-haves” but watch your spending in other less important areas. Be sure to stay within your set budget!