My dd turns one at the end of the month. I don't want to go overboard for her birthday. My idea was phoning family members and inviting them around on a Sunday ( I work on Friday and Saturdays) for a few hours for some cake and coffee to celebrate my dd birthday.
My idea was to have only two cakes and maybe a two tarts available.

Do you think that this is okay? Have any ideas on how to make it as low cost as possible?

I don't see anything wrong with this. I would, however, reccommend having something other than sweets. Do you have a grill that you could do cheap hamburgers or hot dogs? Even if you just did a veggie tray to go along with it might be a good idea. Give people some options if they don't really want something sweet.

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Simple is always the best way to go- especially since they won't be able to recall this birthday! If you have the party in the midafternoon I would think that you would be able to get away with just having the cake.

I would grill something too. Just cake doesnt seem like enough to me. If it's just close family members you could get away with it though.
for my son's first birthday I bought a cold cut tray from sam's club for $25. Then I just got rolls and macaroni salad. You could do something like that yourself for even less.