Stretch your gift-giving budget this holiday season
By Jennifer McPhee • Bankrate.com

Let's face it, Christmas shopping when a recession is looming is downright nerve-wracking. In such uncertain times, buying a pile of overpriced sweaters and gadgets for friends and family feels unwise. On the other hand, nobody wants to be a killjoy at during the holidays. Not to worry -- there are ways to spend less money this festive season without channelling Scrooge.

Face facts
First, get over your denial of how much Christmas actually costs by creating a budget. This doesn't have to be a tedious, complicated exercise. Just figure out what you'd like to spend this year, and subtract the cost of things like postage, cards, wrapping paper, decorations, extra food, alcohol and babysitting. Then, divide the remaining amount by the number of people on your list.

When you see the tiny amount allotted to each person, you'll realize you have two choices -- spend more or shop smarter, says Deborah Knuckey, author of the Ms. Spent Money Guide.

Cross people off your list
Now that you've faced the ugly truth about how much the festive season really costs, start crossing people off your list. This sounds harsh, but it doesn't have to be. Simply talk to a few friends about mutually agreeing not to exchange gifts this year. Most people will be secretly thrilled to remove you from their list without feeling guilty about it.

Instead of trading coffee mugs, celebrate the holidays with friends by going out for dinner together, suggests Knuckey. Just don't wait until the last moment to propose a gift-giving truce, she says. The conversation will get a tad awkward if someone has already bought you a gift.

Buy fewer gifts for your kids
Kimberley Clancy, owner of Frugal Shopper Canada, says her kids used to become overwhelmed by the number of gifts they received every Christmas until she decided to simplify things. Now her children receive three presents, including a big gift from Santa. "They actually enjoy Christmas more now," says Clancy.

Get creative
Knuckey, a freelance writer and real estate agent, is saving extra money this year by making glass bowls to give as gifts. She also avoids giving gift certificates or presents that necessitate enclosing a gift receipt. Instead, Knuckey buys presents on sale throughout the year. "If a gift was originally $75 and I buy it for $50, I count it in my head as a $75 gift," she says. "I have no qualms about that."