In the precredit scene we see how Reese accidentally damages a painting hanging on the wall. As he repairs it, he notices a picture underneath the canvass. He finds the artist's name, Picasso, very funny.
Hal and Lois count the Christmas budget for this year, 93 dollars in coins. If they spend it wisely, they can just buy Malcolm, Reese and Dewey the presents they want. But then they realize that they have forgotten Jamie, and when Francis calls to announce that he and Piama will be joining the family for Christmas, the budget becomes very tight.
The next day Lois goes shopping. In the parking lot a woman dings Lois' car and refuses to apologize. Lois decides to teach her a lesson and dings her car on purpose. The fight turns into a complete demolition derby, destroying both cars.
With this change in their financial situation, Lois announces to the family that all presents will be homemade this year. On Christmas morning the boys surprise their parents with great presents. Dewey has made a beautiful picture frame, Reese produced some exquisite jams and Malcolm offers two clocks he built himself. Hal is too embarrassed to give them his homemade boggle game, panics and tells the boys, Francis, Piama and Lois that he has a special surprise for them all. If they could just get into the car...?
The entire family drives off with Hal clueless about what he's going to do. They stop at a gas station where Hal 'falls' through a window, hoping to get some money from the insurance. Luckily, he is unharmed, ... and the owner has no insurance for such accidents. Hal confesses to Francis that he doesn't know what to do next.
In the car Dewey finds a receipt for the clocks Malcolm gave to his parents. He didn't build the clocks after all, he paid for them with a credit card that he got some months earlier. Hal decides to forgive Malcolm and gives him a big hug. Doing so, he steals Malcolm's card from his wallet. He then, finally, tells the family what they are going to do. They're going to spend Christmas at a ski resort!
At the resort Hal sweats bullets as Malcolm's credit card awaits approval. When the card gets approved, the fun can begin. The receptionist wishes Hal a pleasant stay, calling him Malcolm, which confuses the real Malcolm.