You might have planned out your holiday gift budget, but chances are you overlooked another big source of holiday spending: parties. Whether you're hosting a dinner or attending a soirée, the costs of food, hostess gifts, decor and outfits really add up.

"We all get caught up in the festivities of the season," says Laurie Campbell, CEO of Credit Canada. She says many of us go over the top during the holiday season and don't realize the impact of our spending until the new year. "You don't want to come out of a party in the red and thinking I never want to do that again. You should be coming out of a holiday party feeling like that was a really fun time." Campbell offered us some tips for keeping spending in check for holiday parties.

Plan ahead
"Start with a budget and start as soon as possible," says Campbell. Remember to figure in all of your holiday expenses, including gifts, decor, wrapping, groceries, alcohol—even extra activities that you're bound to do while you're enjoying time off, like going to the movies. There are a lot of things we spend money on this time of year that we don't even think about, but writing it all down can go a long way to helping you plan more reasonable spending.

Invite strategically
Think about who you want to invite to your party. The longer the list grows, the more expensive things become. And consider putting a start time and an end time on your invitations. If there's no end time in place for a party, says Campbell, "you're going to spend more money because people will just keep drinking the booze and eating the food. It allows you to have a break from having to entertain for a long period of time." As for the invitations themselves, you can send fun e-vites for free. Just check out the options from Paperless Post, Punchbowl or Evite. You can choose your favourite design and invite guests in a personal way that's faster than snail mail.

Keep the decor simple
"People spend a lot of money on decor that is small and insignificant," says Campbell. Those figurines or fancy napkin holders can have a big cost for a small impact. A focal point like a tree, on the other hand, offers a big impact, so you don't need much else to make your home feel festive. Extra tree boughs or other pieces of nature, such as pinecones or holly berries, can be used for inexpensive DIY decorations. Consider filling glass dishes with cranberries for a pop of colour. And if you really want to create a festive atmosphere, candles placed strategically around your home can make a big difference. "It gives that holiday glow and it's usually fairly inexpensive," says Campbell.

Be frugal with food and drinks
Whether you're having a sit-down dinner or a cocktail party, the food and drinks are the main event—and chances are they also make up the main part of your budget. To avoid overspending, Campbell recommends planning your menu carefully. You might choose fewer dishes that contain shrimp and meat, and more that are made of root vegetables. Buy in bulk whenever possible when you're feeding a crowd, and don't splurge on the wine—most of your guests won't know the difference, she says. For a cocktail party setup, Campbell suggests asking each guest to bring an appetizer and a bottle of wine. Then, you just need to have some basics on hand to start with. "I find people are actually quite grateful to do that, because no one wants to come empty handed," she says.

Have hostess gifts on hand
During party season, you're bound to need a few small gifts—either to thank your hostess or to reciprocate a guest who brings you something. A bottle of wine and an ornament makes a lovely hostess gift. Consider buying a set of ornaments or candles that you can give to a variety of people. Buying a number of things at the same time also ensures you don't wind up buying last-minute gifts, which is where many of us end up succumbing to the pressure and spending beyond our budgets.

Finally, when planning a holiday party, don't forget what really makes a good party: good people and good conversation. "It's really important that people think about the spirit of Christmas," says Campbell. "If you invite friends or family over, people are just happy to spend time with you."

Want more festive frugal ideas? Check out these tips for saving money around the holidays.