Photo credit: saquan stimpson
The economy is officially in recession. Not that the official deceleration changes anything. Many families have been trying to cut down on expenses for several months now. While the Holidays are often a time of outrageous spending, more and more families are making a conscious decision to keep it simple this year.
While most grownups are fine with less gift giving (many are probably secretly relieved), some parents are worried about their kids’ reaction to a smaller holiday.
One of the most important things you can do is to openly talk to your kids about the need to save money. Make them part of the process. There’s no need to apologize or make them feel as if they’re being cheated out of something, because they’re not. A holiday season that focuses on spending time together, sharing homemade meals and exchanging simple gifts can be a beautiful, intimate experience.
Let the kids know, matter of factly, that this year the family needs to save and so the emphasis will be less on gifts and more on spending time together. Ask them to come up with ideas for having simple, inexpensive fun during the holidays. Review their gift wish list with them and ask them to focus on smaller gifts rather than make big requests for expensive items. Or you can allow a single big item per child, depending on your budget.
Teach by example: when the grownups forgo the traditional gift exchange, it sends a powerful message to the kids that gifts are not an integral part of the holidays. When they hear you tell each other that you don’t want any more stuff - that stuff means clutter - it sends another powerful message about what gifts really mean.
If your kids are very young, you may not need to discuss this with them at all. You can “cheat” by giving lots of gifts that are cheap, but look big or colorful or are beautifully packaged. After all, boxes make the best presents. 
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I completely agree. Moreover, I think that the cost of a present is more of an adult thing. Kids often enjoy and play with low cost presents as much as with expensive ones (unfortunately, after a month of gaming, no one is touching our wii anymore). Like you mention, what could be better than a fortress of boxes