(thanks to Amder's blog for inspiring this!)
1. Don't have a party. I had only small family parties for my children's first two birthdays with a homemade dinner and cake (grandparents, a few aunts and uncles). My kids didn't have friends at age 1 - I did. I didn't see a need to invite my friends to my kids' birthday parties, thus obligating them to provide more gifts that my kids didn't need. I don't think any of them were offended by the ommission! When my son turned three and had a few friends from pre-school, we finally had a "friend" party for him because he had friends to invite. We still kept costs down by doing the following:
2. Keep the location free. Ds1's parties have both been at free, public playgrounds with picnic tables. We supplied sheet pizza and homemade cake. The kids can run around to their heart's content. There are no rides, games, or toys that need to be paid for (which means no whining for more). For ds2, who turns 3 this year, we are choosing a hands-on science museum since he has a December birthday. We are purchasing a family membership for $75, which will allow us to go to not only this musuem, but two more in our area, free all year. We will be able to bring two guests with us each time we go. One of our guests also has a family membership, so they do not need to pay. We will bring the other two children in as our guests. We will pay only for any adult who wants to join us (grandparents).
3. Make the food yourself, if possible. We don't follow this all the time - picking up a sheet pizza is vastly easier, plus not terribly expensive. But I have never bought a store-bought cake for my kids' birthdays. I enjoy the process of making and decorating it for them. I have also made plain cupcakes in the past and brought icing and sprinkles for the kids to decorate themselves - it was a big hit. The kids had fun and the activity took up some time to give them a break from running around.
4. Skip the goodie bags, or hit the dollar store. I'm not a huge fan of the toys and candy that usually come in goodie bags, but I still do provide them (I guess because I feel obligated? When did this become mandatory?). Anyway, the dollar store has a lot of little trinkets that kids enjoy. I have done coloring books with a box of crayons in the past, or hair ties for girls and Spiderman Pez dispensers for the boys. The girls had their hair ties in before the party was even over
5. Limit the guests. I never understood a three year old having 20 kids at their party! Or the concept of inviting an entire classroom of kids, some of whom your child is not even friends with. Am I going to hurt someone's feelings at some point by not inviting their kid? Well, probably. But it's my kid's party, and they can invite who they want. And I am NOT going to be responsible for 20 five year olds. My kid's parties have about 5 kids, mostly cousins at that age. It's very manageable and not too overwhelming for the kids. All the kids know and like each other - no one is left out.
6. Limit the decorations. My kids have not been mad at me yet for lack of decorations. I think the most I have done is a handful of balloons at their parties. Honestly, they are too busy running around having fun to care. If you want to decorate, get a bag of balloons and a roll of streamers at the dollar store. Skip the themed parties (matching plates, cups, napkins, etc.) and get plain paper goods. Reuse your plastic silverware (my mom has a few buckets that have been around since I was a kid - I'm surprised because I have never seen anyone else save and reuse these. We have at least one big party per year, but rarely have to replenish our plastic silverware).
7. Have the kids entertain themselves. Due to my kids' ages (2 and 4), they really have not needed to be entertained yet at a party (the playground is entertainment enough). But, when they do get older, I can plan activities such as treasure hunts, scavenger hunts, sprinklers, swimming, etc. that are free. Kids are marvelous at making their own fun. Skip the clowns, oversized bouncy houses (ok, these are a lot of fun, but expensive!), characters, etc.
8. Skip it altogether. I haven't done this yet, but I can see the appeal in giving your child a choice between a party and, say, a trip to a favorite park or movie. He or she might opt for a quieter, family outing rather than a party, saving you some cash AND stress.