I had a very frugal carnival party for a 6 year old. All the games were made from items we had on hand. Prizes came from Freecycle but you could do the same for a very little more expense by purchasing from Oriental Trading (or the Dollar Store). Games were bean bag toss, fishing booth, basketball, bowling, duck pond and candy walk. The main costs were the cake and punch, and candy for the candy walk.
Carnivals are a great idea for kids of that age! There are many classic carnival games that you can play with small or large groups of kids. Since everyone wins a prize, every kid will go home happy. Make tickets for the invitation, and serve carnival food like popcorn and hot dogs.
Hope this helps,
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