Short answer
Traditionally, the bride's parents hosted and paid for the engagement party, but that custom has faded. Today, the couple, both sets of parents, or a mix of family and friends often share the hosting and costs. Whoever offers, or whoever feels able, can host.
In the past, the engagement party was usually hosted by the bride's parents, and they covered the cost. That tradition comes from an older era and is no longer expected. Modern couples often host their own engagement party, or both families split the cost and the planning. Sometimes close friends or siblings offer to host as a gift, which can be a lovely gesture.
There are no rules about who should pay. The most practical approach is to decide together what you can afford, then talk openly with anyone who offers to help. If parents want to contribute, you can accept graciously, or suggest they cover a specific part, such as the food or the drinks. The key is to avoid assumptions and have a clear conversation early on. If you are hosting yourselves, you can keep costs down by choosing a simple venue or asking guests to bring a dish, though that is less common for engagement parties.
What matters most is that the party reflects you as a couple, not an outdated expectation. If a parent insists on hosting, let them, but make sure you agree on the guest list and the style. If you prefer to host yourselves, that is fine too. The tradition is flexible, and the only real guideline is that the party should feel generous and welcoming, whatever the budget.
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