For a recent birthday party for my youngest child, my husband and I found great party favors/activities at Michael's...the craft store.
In the clearance bins, we found wooden door signs that hang from door handles like the do-not-disturb signs on hotel rooms. Each package contained 6 wooden door paddles in different colors and sold for the discounted price of $2 a package. That's about 33 cents per favor and we also picked up discounted glitter paint, stickers and other items to decorate the wooden door signs.
The kids spent a good part of the party decorating their door signs with names, messages (Yael's room: Keep Out!!) or pretty scenes. The activity was equally popular with the boys and girls.
So keep an eye out for cute projects, gift ideas and party favors in the clearance bins of craft stores. Children can actually save and use party favors that are craft projects. The alternative -- party bags stuffed with plastic trinkets and rubberized toys-- waste money and create clutter.