Most people I know tend to shop for the practical and sentimental gifts for Christmas - and not the expensive ones. But there are those who love to splurge as well. Yet others have financial remorse in January when the credit card bills start rolling in. So what is the right amount to spend on Christmas gifts?

The National Retail Federation conducted its annual survey this year and found the average American plans to spend $659 on gifts for loved ones, but that's not really an exact measure, considering people make different amounts of income. An economist says the typical family spends about 1% of its annual take-home pay on gifts.

If this sounds like the best way of estimating how much you'll spend, make a budget and stick with it. Moms and dads should keep a secret notebook to track expenses per child.

So, before going to the stores and buying everything you think your loved ones will like, remember, it doesn't take a lot of money to make the holidays memorable.

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