The golden rule: only invite wedding guests
The one rule worth following is this: do not invite anyone to the engagement party who will not be invited to the wedding. It is uncomfortable for someone to celebrate the engagement and then not make the wedding list, and it avoids the assumption that an engagement invite implies a wedding one. If you are not sure someone will make the wedding, leave them off the engagement party.
This rule also helpfully caps the size: your engagement party guest list is a subset of your wedding list, never bigger. If the wedding will be small, the engagement party should be smaller still.
Family, close friends and the inner circle
Start with the people who matter most: immediate family on both sides, and your closest friends. For many couples that is the whole party, and there is nothing wrong with keeping it to the inner circle. An engagement party is allowed to be small and personal.
If both families are large, the numbers add up fast, so agree with your partner (and anyone hosting) on how far the family net spreads, for example immediate family only versus including aunts, uncles and cousins. Apply the same boundary to both sides to keep it fair.
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Find My VenuePlus-ones, kids and colleagues
Decide your plus-one policy up front and apply it consistently: a common approach is plus-ones for guests in serious relationships, but not for everyone. Be clear on the invitation about whether a guest can bring someone, so there is no confusion. The same goes for children: decide whether it is a kids-welcome or adults-only party and say so.
Colleagues are optional and depend on how social your workplace is; there is no obligation to invite them to what is a personal celebration. When in doubt, keep it to the people you would genuinely want at the wedding.
