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If you're on a tight budget and your child is clamoring for a birthday party, don't despair. At the heart of everything, most kids really just want to have a handful of friends over to play. You can make the party as simple as an outing to a local park or the community swimming pool. Pick some old-fashioned games to play like pin the tail on the donkey, have a 3-legged race or a potato on a spoon race, and play charades.
You can provide lunch sacks to be decorated as an activity rather than buying decorated "goody" bags. If you want to provide more than cake and ice cream, have a "make your own pizza" party, with homemade dough and pizza sauce plus a variety of toppings.