There are a few decisions you need to make before you start inviting people to your party.
What's the Occasion?
You should decide why you are entertaining people. Is is a celebration, like a birthday party or a congratulations? Is it a holiday party? Is it just because you haven't seen your friends in a while? Or because you are welcoming warm weather? Once you create a focus for your party most of your other decisions will be easier to make.
How much do you want to spend?
If this is a cocktail party around Christmas time and you are going to ask people to get dressed up, you may want to spend a little more money. However, if this is just a small congratulations for your roommate's promotion, you will probably spend a little less. Don't forget, the more people you invite the more you will have to spend because you will have to provide some kind of food or drink to that many more people. Deciding what you are going to provide for your guests will help you figure out how much money this get together will cost you.
What are you going to provide?
Is this a cocktail party with just appetizers? Are you going to serve a full dinner? Another option is to just serve soup and salad? A barbeque can also be done rather frugally.
Again, deciding how much you would like to spend on the party will help you make this decision.
What are you going to ask others the bring?
Don't be embarrassed to ask people to bring something. Tell people you'll provide the food if they bring what they want to drink. Or, tell people to bring whatever meat they want to grill and you will have the cooler of beer ready and waiting.