The best way is to be open and honest with them about this -- and even if they don't take the hint, let your own gift giving this year be in line with what you can afford.
After all, gift giving at Christmas shouldn't be a burden (although I'm afraid it often is). Instead, it should be a joy, because it gives us an opportunity to let others know how much they mean to us, and how much we value their friendship. But when we only give out of obligation, or to impress others -- then it gets out of line. We can even give out of guilt, hoping somehow that our gift will make up for the way we've ignored them the rest of the year. Don't let these "reasons" be true of you.
Have you ever asked yourself why we give gifts at Christmas? One reason is because after Jesus' birth wise men came from far away to find Him, and they presented Him with gifts. But more than that, they worshipped Him as the Savior of the world. The Bible says, "They saw the child with his mother Mary, and they bowed down and worshipped him" (Matthew 2:11). Is this your response?
But Christmas is also a time to remember the greatest gift of all -- the gift God gave us by sending His Son into the world for our salvation. As this Christmas approaches, may you exclaim with Paul, "Thanks be to God for his indescribable gift!" (2 Corinthians 9:15).