How do you think this statement would go over in your household: “Due to the downturn in the economy, your birthday is canceled this year.” Probably not very well. Just because money is tight it doesn’t mean that it has to put a damper on celebrating your child’s birthday. With careful planning, you can throw a party that kids will love—and they won’t even notice that you did it on a shoestring budget.

1. Make a budget by deciding on what you can afford to spend on the party and stick to it.

2. Pick a location. Parks and backyards are perfect for large groups of kids and more importantly, they’re free.

3. Choose the activities and games. Hit up your friends for inexpensive game ideas or go with old simple favorites like playing musical chairs, do arts & crafts project or have the kids line up to whack a piñata.

4. Select what type of food you will serve. Try to make most of the food yourself, including the cake. Enlist the aid of the guest of honor, as well as any siblings. Kids are perfectly happy with inexpensive foods like hot dogs and pizza. Have plenty of snacks like goldfish crackers, baby carrots, and cheese slices. Offer juice, punch or soda from large bottles, rather than pricey individual containers.

5. Create and give out invitations. Handwritten or computer-generated invitations work well, add a personal touch and are fairly inexpensive compared to invitations purchased at the store. Save even more money by foregoing postage and hand them out yourself. Be sure to hand out the invitations discreetly if you hand them out in a class or play group setting to avoid hurt feelings. If the guests are young, it may even be a better idea to hand out to the parents to avoid lost invitations.

6. Buy decorations, game prizes, paper goods and candy from close-out or discount stores. You can even use some items you already have on hand as part of the decorations. For example, if your child is a fan of NASCAR, set up a race car set on one of the tables. Use paper lunch bags as goodie bags. As a fun activity, have the guests decorate them at the party. Fill them with candy bought in bulk, and think about buying some low-cost gifts in quantity as well—stickers, inexpensive yo-yos, and pencils.

7. Downsize. If your child still insists on an elaborate party, make it clear that she may only be able to invite just a few special friends rather than a huge gang of kids.

For your next party, remember cheaper parties are possible by just cutting a few corners and by using a little creativity. Skimping on money doesn’t mean you have to skimp on the fun.