Begin by cutting your fabric into a rectangular strip. The size will depend on how much fabric you have or how big the gift is that you want to wrap.
Fold your ribbon in half and pin it to the patterned side of the fabric (this is called the "right side").
Now fold the fabric with right sides facing each other (the ribbon will be tucked inside). Sew a seam up each side and clip the bottom corners at an angle to make it neater when you turn it back in the right way later on.
Zig zag or overlock the edges if you feel like it. I was at a friends place so I took advantage of her overlocker as it does such a professional job. Often I just use my pinking shears to cut fabric out so that it doesn't fray too much.
Fold over the top twice, press it and stitch along the edge.
That's it... not too tricky really. You can make them as large or small as you like and either gift them or reuse them year after year. Makes good sense for the environment, plus it's a nice family tradition too.
We have a variety now. The 75% off Christmas fabric sale at Spotlight is the best place to buy material (right after Christmas). Don't get carried away like I did and end up with 5m of checkered reindeer fabric though even if it is down to $2 a metre! I've been sewing napkins recently to use it up.
I was inspired by Louana who is doing Handmade Christmas posts over at her blog.