Holidays are a time for parties and merriment, so decorate your home and have your friends over to celebrate. But that doesn't mean you have to go broke in the process. We're all watching our pennies these days, and you already have a certain amount of your earnings allotted to gifts. So, how do you entertain your friends while minding your wallet? Have no fear; we have some great tips for throwing a soiree to remember on a budget.

Spread the Word

A mailed invitation is a time-honored tradition for getting guests to your party. But a paper invite comes with additional costs. You can make and print your own invite, but postage adds up quickly if you have a sizeable guest list. If you must go the snail-mail route, think about a postcard. It will save you the cost of an envelope and the postage is considerably cheaper. If you want to get super savvy with your savings, an e-mailed or Web-based invite is a good way to go. One downside of this option, however, may be a too-full inbox or a forgetful guest not giving his or her RSVP in a timely manner.

Hang the Holly

Holiday decorations immediately get everyone in the spirit, but there's no need to make over your entire house. Instead, pick a few rooms to decorate. For example, your entryway, living room and bathroom will be frequented by all of your guests, so focus on those rooms as your decoration stations. And you don't have to go overboard -- some Christmas greenery on the banisters and red bows on the mantle along with clusters of mistletoe in the doorways and favorite holiday songs playing in the background will keep everyone in a festive mood. And, of course, your Christmas tree will be the main attraction.

Eat, Drink and Be Merry

Food and drinks are usually the bulk of the cost of any party, so this is an area where a little planning can translate into big savings. The first rule of thumb is to skip the sit down meal and serve hors d'oeuvres and appetizers instead. And when organizing the food on the buffet, put the less expensive and more filling foods at the front of the line, so guests will fill up on veggies and rolls before they reach the savory croissants. Another trick is to walk around and serve the more expensive items on trays. That way, guests are likely to enjoy one or two shrimp cocktail instead of piling their plates high.

Speaking of cocktails, you don't need to offer a fully-stocked bar. Choose one signature cocktail to serve and offer a small selection of beer and wine. And don't forget coffee and soft drinks for the designated drivers.