Tell your parents the truth. Lying to your family can just lead to a world of hurt.
You'll be able to find jobs for them to do where they don;t have to contribute financially, like helping you to make invites, or something (my mum helped me to make my dress, ironed it for me, then threw a brunch the next day - a lot cheaper than what dad or the ILs threw in, but still really important)

I went to a wedding a few years ago where aunts and uncles only went to the reception. The rest of us took off to a local winery, got on the sauce, then the bride and groom came and met us up afterwards and we hit the town. Messy, messy night, but SOOOO much fun! It was a great way to do it.
But if you have to exclude too many people for budgetary concerns, then maybe go back to your original plans.

You'll know what best suits the people close to you. Go with your gut, and do it for you and your DF not for anyone else. Be strong, it's the best way to get a great wedding.