How do you decide???

Hi Ladies,
A friend and I were talking the other day (she's a homeschool mom as I am living on one income) and we got talking abut budgets for all those wonderful "extras" that we want to give our kids. I'm not talking video games here, but music lessons, being able to play on a sports team, supplies for a special area of interest. I pay $165 (total) a month for all 3 of my boys to take piano lessons. They are also in a band and I have been trying to budget for a base guitar and amp for one of them and some good microphones for my 2 singers. Two of my friend's children are also in the same band. She also has her kids in piano, cello, violin, viola and guitar lessons. Her kids are also active in sports. I have 2 that do swim team, but that's it for the moment because I can't afford to have them in other sports and be driving them all over the countryside 2 nights a week for games and add practices the other 3 nights of the week. Her husband just about had a cow the other night when he went over the budget and realized how much they are paying for all the music lessons. The next day she found out that her viola playing daughter's lessons will be longer next Fall and that increases the cost tremendously. All of their children are very talented musically and she does not want to have to give any ot the lessons up.
I'm trying to help her find ways to cut down on costs in other areas so that she can have the kids continue with the lessons. She asked me the question: How much should a parent budget for their children's activities? I told her I thought it was all relative to how much disposible income you have and where your priorities are. So....I'm asking you all, how do you decide who gets to do what and how much to spend????