Put a ho-ho-hold on your holiday spending
By Michelle Warren • Bankrate.com

This is the season for overspending. Between elaborate gifts, party outfits, decorating, entertaining and incidentals, such as a taxi home from a party, holiday expenses add up quickly.

This year, 94 percent of Canadians plan to give gifts, spending an average of $687, according to a study conducted for the Retail Council of Canada. These consumers plan to spend and additional $670 on nongift items, such as clothing, travel, décor and entertainment for a total of $1,357, up from $991 last year.

While some are in the mood to get shopping, rising fuel prices and the cost of home heating have many concerned about spending. But that doesn't have to mean forgoing celebrations -- there are plenty of ways to cut costs without turning into Scrooge.

Shop early
Look for bargains year-round so shopping isn't a financial burden in December. If you can't face Christmas shopping in June, Janet Scotland, a financial counsellor with SISIP Financial Services in Comox, B.C., recommends saving year-round. Most financial institutions offer savings accounts where money can be transferred automatically each pay period.

If you haven't planned ahead, Scotland says it's important to prioritize. Examine and question each expense. Christmas comes with emotional baggage, and often people do things because they think they should, not because they want to. "Really think about what's important," she says.

The curse of credit
Credit cards lead to overspending and impulse shopping. If possible, leave the card at home. And don't be tempted by offers to skip a payment or reduce your minimum payment during the holiday season. You'll pay more in the long run as the interest will continue to add up. You don't want to be paying off this Christmas when the next one rolls around.

Budget isn't a four-letter word
Avoid such scenarios by setting a budget. It sounds tedious, but it works. Think about what you're willing and able to spend, make a list of everyone you buy for and discuss price limits. When people don't make lists, they usually spend about $100 more than they'd planned, says Scotland.

Warren Peters, of Cambridge, Ont., admits he always overspends, so this year he told everyone he's spending $20 per gift and he hopes they do the same. "It's easy to go out and spend $50 on a sweater, but when you set a limit, it forces you to be more creative," he says, adding that starting early helped. "There's more time to think about things, and you don't do the panic buy."

Quality not quantity
That doesn't work for everyone. "The earlier I start, the more I buy," says Martha Walkey of Port Hope, Ont., who instead has cut down the number of people for whom she buys. "I have instituted a kids draw for the nieces and nephews, as the gifts were out of control."

Many groups of friends agree to stop buying for the children. Instead, each family kicks in $25 (a lot cheaper than buying for a dozen kids) to sponsor a needy family.

Creativity and child labour
People say Christmas is all about the children, but too often kids reap the benefits and do none of the work. So, put them to use making Christmas cards and colouring paper to be used for wrapping and even making gifts. Grandma is far more likely to treasure a homemade card than a $4.99 version. As for art from day care or kindergarten, don't surreptitiously throw it out -- gift it. Invest in a couple of inexpensive frames from the dollar store, and voila, fantastic presents for devoted relatives.

"You can still show someone you're thinking of them without spending a lot of money," says Scotland. If your creative juices are as limited as your budget, make gift certificates promising labour, such as an evening of babysitting or an oil change.

Savvy entertaining
Throwing a party? No matter how tempting it might be to stock the bar and buy every type of mix, it's a waste. Instead, come up with a festive signature drink, such as a cranberry martini. Keep limited alternatives on hand, such as cola, beer and wine.

As for food, keep it simple -- you don't want to spend the evening in the kitchen. Simone Christensen's annual holiday party in Mississauga, Ont., is a highlight for her friends. Everyone benefits, so everyone helps out by bringing a fun or fancy dish. In other words, share the joy and the burden -- chances are people will be more than happy to help if it means they're not hosting and cleaning up afterwards.

Decorating on a shoestring
Forget elaborate décor -- nothing evokes Christmas like traditional scents. If you're having a party, set the mood by making a mulling scent bag out of cheesecloth, filled with cinnamon, cloves and nutmeg, and simmered on the stove.

Your home is filled with practical items that can help bring the season to life, says Val Sharp of Sharp Redesigns in Victoria. "Fill up a glass vase with coffee beans and cranberries two-thirds full," she says. "Put tall branches from any trees or bushes in your yard into the vase to make an elegant tall display."

Gather nature's ornaments, such as tree boughs and pine cones from nature, not a garden centre. Sharp recommends cutting branches from the bottom of a Christmas tree to display vases or on the mantle. "You can also tie them together with a big red bow and hang it on your front door instead of a wreath," she says.

Dollar and thrift stores have plenty of decent ware -- it's all how you arrange it. Kitschy ornaments look great piled in a glass bowl, and tea lights always set the mood. Walls a little bland? Take down pictures and wrap them like presents for a fun statement in the hall.

If you have energy left, there's no better time to shop for holiday décor than the weeks after Christmas. Items, including wrap and cards, are often reduced by as much as 70 percent. The holiday season should be fun, not wrought with financial stress and regret. Cut the spending and increase the joy.

Michelle Warren is a writer in Toronto.