With the Euro down, it's really a good time to stretch your dollar and travel Europe. Even so, trawling the streets of Europe isn't cheap by any stretch of the imagination. If you're looking for cheaper ways to vacation in Italy, you have to go beyond the general tips like booking your flight early, going South and avoiding the 'Big 3' (Rome, Venice, Florence), or sticking to free entry places of interest. With the following tips, you can even enjoy the 'Big 3' without having to eat grass when you come back from your trip!
Most hotels and shops will give a discount for cash. The reason is simple. Credit cards cost the merchant 3-9% plus they have to wait for their money. Bargaining is alive and well in many shops as they have usually have a buffer built into their prices. So ask for more discount if you're paying by cash.
Follow The Locals
Yes, it's very nice to dine with the Colosseum as the backdrop, just don't be surprised when the bill arrives. Save for one or two indulgences, you might want to avoid restaurants that cater to tourists like the plague. Ask locals that you meet where they go for lunch or dinner. Travel two blocks off the tourist spots and find osteria and trattoria that the locals use. It will be worth the walk.
Lodging and Food
Accommodation will probably take up the bulk of your budget and the best way to save is to stay in a hostel or apartment. The best thing about renting houses is the access to a kitchen which gives you the option of cooking. Eating out can be a very expensive affair in Italy and preparing your own meals will save you a considerable amount, while letting you try the great little panetteria (bakery), fruttivendolo (fruit stand), enoteca (wine shop), latteria (cheese monger), and pasticceria (pastry shop) that you've been walking past. You can still enjoy a restaurant meal without breaking the bank by going for the menu à prezzo fisso (fixed-price menus). They cost anywhere from €10 to €40 and usually include a selection from amongst the medium-priced dishes on the main, a la carte menu.
If you plan on visiting all the touristy sites, don't give this a pass! Most major cities offer a city pass. It's like paying admission to local tourists sites at wholesale. The pass gets you into multiple attractions at one discounted rate. For example, for €23 you get the Roma Pass which covers public transport, free admission to the first two sights you visit, and reduced admission on all the others covered by the pass for three days. Check with your hotel's concierge or a travel booth for information.
There are many types of European rail passes available including passes good for train travel in a single country or for multiple countries. Do your legwork and decide if you're travelling extensively throughout Europe or just within the country. This will determine the type of rail pass that you need to get. If you are below 26 years old, you can get further savings with the Youth Pass. Please take note though that some train services require reservation.