When it comes to birthdays, Christmas, vacations, special trips, etc... I have a financial plan set aside. In each scenario there is a very specific earning method that I use to pay for the event, gifts or for whatever the situation calls.
The past three years, I have set aside babysitting earnings to pay for Christmas. I no longer provide childcare services full-time but I do have a few wonderful kiddos who I have been able to be the backup babysitter to on occasion.
As I receive payment, that money is marked for Christmas and is not touched until it is spent for its purpose. It isn't necessary that I do it this way but this is how my mind likes to divide and compartmentalize things.
I feel much more at ease when I know things are taken care of and that it is well organized. Beginning January 1st - I will have decided on a Plan A and Plan B that will provide Christmas 2013.
Of course things may change throughout the year and a new way of saving for the holidays may present itself. If you are self-employed, you must roll with this type of change as nothing is a guarantee.
Other ways to pay for Christmas:
1) Sell unwanted items at consignments shops.
2) Sell unwanted items on Ebay or Craigslist.
3) A lot of towns and suburbs have Facebook groups for selling your unwanted items... these are especially great as you don't have any seller fees to pay out of your earnings. Tip: Always meet to finalize the sale in a public and neutral area.
4) Own a website/blog? Sell dedicated ad space that will pay for the holidays.
5) Are you crafty? Sell your homemade items using any one of the above mentioned methods.