We do things a bit different. I have a budge of 1 % of DH's annual gross income from last year. I pull it out of the tax refund. That's all I get to work with. I shop all year round. This year I am keeping better track of what I am spending and what it would be worth if I spent full price. As the kids get older (they are all under 8) I may need to pad the budget a bit as I am sure the 8 dollar school shirt will fall to the 40 dollar team jersey........
To keep things in check DH and I get the kids "Four Somethings", something they want, something they need, something to wear and something to read. Santa only brings one gift and then they can get each other something for under $5. With four kids, that's already 32 boxes under the tree. It works pretty well now.