Shay Rockhold would love to give her four children the Christmas of their dreams. But she knows she would regret busting her budget by overindulging.

“I’d like to spend $500 on each kid absolutely – but I can’t do that,” said Rockhold, who lives outside of Charleston, S.C. “I’m not going to pull out the plastic for Christmas.”

Instead, she sets a budget and sticks to it.

It’s a plan many would do well to emulate, according to financial planners who caution that acquiring credit card debt at the holidays can take months, even years, to pay off.

Before hitting the malls, experts recommend making a list of expected expenses, trimming your gift-giving list, and determining whether to pay by cash or credit card.

Set a budget for Christmas or Hanukkah spending that you can absorb without impacting your monthly bills, said Liz Pulliam Weston, whose newest book, “Easy Money: How to Simplify Your Finances and Get What You Want Out of Life” (Pearson Prentice Hall), comes out in December.

A person who has no credit card debt and is saving for retirement could spend 1 percent to 1.5 percent of their income on the holidays, she said. That’d be $1,000-$1,500 for a family earning $100,000 a year.

“Sticking to your budget means you won’t have to despair over January bills,” and that makes for a less stressful holiday, she said.

Rockhold, who sells gourmet foods at in-home parties, uses her income from September and October for Christmas spending. “I set that money aside and go out and do the majority of the shopping in one day,” she said.

Others make monthly bank deposits in holiday savings accounts, often called Christmas Clubs. The accounts, which can be opened in January through late fall, are designed to help people save for short-term financial goals, said Virginia McGuire, spokeswoman for the American Bankers Association.

The key to managing holiday spending is creating a budget that covers as many potential expenditures as possible – not just gifts, Weston explained. Other costs include decorating, entertaining, traveling, clothing, charitable donations and eating out.

“Once you write all this down, you’re going to go, ‘Ahh!”‘ Weston said.

Everyone doesn’t need a gift

If you need to scale back, start with your gift list. Weston suggests cutting anyone for whom you buy a gift card. If you don’t know them well enough to select a gift, she asked, why are you giving them one?

Let people know early that you’re downsizing your holiday gift list. Although suggesting an end to a gift exchange may seem awkward, you might be pleasantly surprised by the reactions from people on your list. They’re likely being pinched by the same economic forces: higher gas prices, ballooning mortgage payments, rising insurance costs.

“People actually respond well to that,” said Sally Herigstad, an accountant in Kent, Wash., and author of “Help! I Can’t Pay My Bills; Surviving a Financial Crisis” (St. Martin’s Press, 2006).

You might suggest meeting for lunch or a movie in lieu of exchanging gifts. Chances are you’ll still spend less money.

Give time, not stuff

Another option is giving gifts of time, said Allana Baroni, the parties and entertaining expert on the how-to Web site www.ehow.com. Give a child a pair of gloves with an invitation to a snowball fight, or present an old friend with a walking stick and a promise to hit the local trails.

She also suggests ending the office gift exchange. Ask your supervisor about organizing a staff outing instead to serve at a soup kitchen or shop for a needy family, Baroni said. Doing good will lead to more positive feelings than exchanging impersonal gifts.

Another place to cut spending is entertainment. Herigstad said planning your holiday calendar is critical.

“If we just start spending money, we don’t get the most for it,” she explained.

She recommends potluck dinners, less expensive than eating out.

“Plan on eating in more. It’s more homey,” she said. “Dig out the old family recipes and make everybody’s favorite.”

Select one big outing, such as a play or the Nutcracker ballet, rather than buying tickets to many events, said Herigstad. “Find out which one really means the most,” she said.

When it’s time to start spending, do it thoughtfully. Some people can’t handle cash because they feel they have to spend it, Weston said. Others get carried away with credit cards.

She suggests you ask yourself: “What would make me think before I spend?”

Plastic is OK if you don’t carry a balance and can limit your spending, Weston said. Using your credit card may even provide some additional protections if there’s a problem with your purchase, or earn you bonuses such as airline tickets or cash back.

Finally, know when to stop shopping. Don’t keep buying little things, Weston warned.

“Put a pause button in your shopping experience,” she said. “Take a minute to take a breath and ask, ‘Is this really what I want to do?”‘

Added Herigstad, you may think “I deserve this. But do you deserve the stress that comes with having spent the money?”

“Your holiday spirit will be short-lived” when the bills start rolling in, she said.