One of the ways to save money at Christmas time is to make your gifts. I like to make these homemade gifts not just pretty, but functional too. For the last couple of years I have been knitting dishcloths using the patterns from the Monthly Dishcloths Yahoo Group.
Twice a month guest knitting instructors post the instructions for a patterned dishcloth. Ten rows are given each day for a week. It is easy to complete ten rows a day and fun to see what the completed pattern looks like at the end (you are never given a photo to look at in the beginning so it is a surprise).
These dishcloths are made with an inexpensive cotton yarn, so they are frugal and useful. The multitude of colors available allows you to match someone's kitchen colors easily.
Get started now and you can get seven or eight clothes made in time for Christmas. If you want to be more elaborate include the dishcloths in a basket with other kitchen items you have picked up on sale.