Make a decision about how much you can honestly afford to spend on holiday shopping that won't put you in debt or make things hard on you financially. The average American lives on a pretty firm budget, so when the holidays come they must sacrifice some small pleasures to make sure they are able to buy gifts for their friends and family. Just remember to be realistic about what you are willing to sacrifice. You may spend your monthly clothing budget on holiday gifts and then crave a new pair of boots to go to a holiday party. You need to set a budget and limits that you will stick to – without caving in and racking up the credit. Try your best to leave credit cards out of the equation so you won't have buyer's remorse in the new year.

Santa has to buy presents for the whole world, but you don't. If your shopping list includes more than five people outside of your immediate family, cut down on the number of people on your present list. Then, bake some cookies to give to all the people you snipped from your original gift list. This will ensure you spread the holiday cheer without looking like a Scrooge.

Sales aren't the only way to get great deals on the gifts you want for your friends or family. Before you shop online, perform a quick web search for coupon codes for your favorite online stores. Before you shop in local stores, comb through the coupons you received in your mailbox before hitting the mall. While you search through the flyers, make sure to comparison shop for the item you're interested in. Savings of $10 to $100 can happen just by keeping your eyes peeled for deals (but make sure you know the couponing dos and don'ts).

Get over the how-am-I-going-to-pay-off-my-credit-cards-next-month anxiety by giving yourself the gift of developing new-and-improved spending habits. For example, for every dollar you spend on gifts, you could find a way to remove that dollar from your regular spending. Around the holidays, you can use those savings to buy presents, but next month – and the rest of the year – what you save can go into your savings account.

A small, thoughtful gift is worth more than an expensive gift that someone may never use. Avoid impulses to shop at trendy department stores and start the holiday by taking a moment to think about what those on your list could really use. For example, if your sister loves to bake but can't get the hang of homemade pie crusts, you could buy her a simple pastry-making tool for less than $10 and include a copy of a fool-proof recipe.

Your friends probably struggle with overspending as much as you do over the holidays. Give them the relief of forgoing buying gifts for you by organizing a group volunteer day instead. You'll get to spend quality time together – plus, you'll come out of the day feeling proud of your efforts rather than suffering from buyer's remorse, and anyone can benefit from volunteering.

Don't let finances rob you of the fun of the holiday season. Spend time with your friends and family, base your gift buying on sentiment rather than dollar value, and avoid giving yourself a year-round debt headache.