First thing first - start with the Graduation Announcement and then the Graduation Party Invitation: A graduation announcement 'announces' where and when the person will be graduating, with a presumed invitation to the graduation ceremony. A graduation party invitation is just that - an invitation to a party. The graduation announcement precedes the graduation party invitation in terms of when they are sent. I recommend sending out the announcement at least 6 weeks before the formal graduation ceremonies and the graduation party invitation at least 3 weeks before the party.
Email announcement and party invitations are acceptable, easy to do, and can be free. But be careful: It is perfectly acceptable to send your graduation announcements and invitations via email. However, if you do opt for this route, and you wish to include both friends and their parents, make sure that you send the email to the parents and the graduate's friend. Although the graduate will most likely have his or her friends' email addresses readily available - you can't count on the friend to convey the party invitation to their parents. For this reason, and because I feel a formal invitation is a bit nicer, I would recommend going with a written invitation that is sent in the mail.
If you are looking for free graduation announcements and/or party invitations - just type "free graduation announcements" or "free graduation party invitations" to find some options.
Decide what you will serve: One of the questions I often hear people ask when they are discussing the graduation parties they've been invited to is "do you think they are serving a meal or should I eat before I arrive". Take the mystery out of it and state on your invitation if lunch or dinner will be served. Otherwise your guests will assume that appetizer-type foods will be served. You can even be more specific by listing the food details: "Big Barbecue Planned" "Come for Coffee and Cake" or "Endless Buffet - Come Hungry."
Considering that many families are invited to multiple graduation parties on the same day during the graduation season your guests may not eat as much as you would expect. So I always advise having lots of storage containers and bags on hand in case you do find yourself with plenty of leftovers. And if you have too much for just your family - I'm confident that your friends and family will be happy to take some home.
Will there be decorations? This largely depends on whether the graduation party will be held outside or in? If it is inside - then it is a bit easier to hang decorations (party supply stores have many to choose from). Whether inside or outside I recommend you put centerpieces on the table. The simplest, but often the nicest, is simply a vase of fresh flowers in the school colors (or something close to it). If you can't get fresh flowers in the needed colors try a craft store for fabric flowers. Usually the color selection is quite large. Confetti on the table is also a fun touch. Balloons in the school colors are terrific too - ask your party supply store to arrange them in balloon bouquets for even a more festive look. And make sure you let your guests know that they have arrived at the correct location by putting balloons (mylar or latex) and/or a banner at the front door.
Would your graduate like a theme other than his or her school colors, logo, or mascot? I've attended beach graduation parties, Hollywood ("You're a star") graduation parties, and sports related graduation parties. Use your imagination (and the internet) for decoration ideas.
Give the graduation 'star treatment': This day is all about your son or daughter so make sure that they are the "guest of honor". Many families feature a slide or video show (either on a computer or on a screen) featuring their child through the ages to the delight of their guests. Also - set up table that features the honors and interests of your child - whether it is sport or academic achievements or hobbies. A poster board featuring pictures of him or her with family and friends is also a great touch.
Thank your guests for coming by giving graduation party favors: It is always nice to send your guests home with a small thank you gift. It can be as simple as a wrapped, personalized sweet, pen, keychain, or any other practical or edible item with a cap and gown theme.
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