I have 2 kids.
For their parties, if we do have a party, it is ONE party. For each. Not a friend party, and then another one with family.
Then, per guest list, WE decide, how many friends they can invite. And it is determined by budget.
And we plainly tell our kids that.
And it is NO problem, for them or us.
I don't know about combined parties.
We don't do that.
I don't think, that combined parties necessarily saves, money.
For our kids' parties, there were times that my daughter didn't even want a "party." She just wanted 1 or 2 friends, to come over and it was real low key and simple. We asked her how she wanted to celebrate, and that was that. No HUGE party and she didn't want that anyway.
And no separate parties for friends and then relatives.
At my kids' ages, it is friend... parties. No relative parties. But some of the direct related relatives, can come. But they are not the focus. My kids friends are here for partying, and we focus on that.
My kids are 7 and 11.
This past year for their birthdays, one kid had 3 invited. That was my son's decision. For my daughter, she had 3 invited as well. That was her decision. And it was fine. And it was not a budget buster.
And it was fun and they were happy and it was special for them. And the 3 kids that were invited, had fun too.