Plan your itinerary
I feel that unless you plan on living in Europe for 12+ months you should plan an itinerary to keep the costs down as much as possible. Take into account transport to and from the airport or train station. At London airports the train is a whopping twenty-one sterling!!!!!! Some places are cheaper to travel by air or train, explore these options. There are always cheaper alternatives you just have to really look and quite often Google will not point you in that direction. Try to look for local European websites or blogs that will give you access to quality information. Join or read travel forums for up to date local knowledge. Ask questions on these forums. They have always guided me in the right direction.
Pre-book those accommodation and transport specials
If you see a special that fits with the holiday budget I suggest you lock it in. I found that travelling between countries in Europe at the last minute were expensive. Travelling on the transport network within a country was cheaper than booking in advance.
Live like the locals
Find a supermarket and buy water and snacks. This will save you spending a small fortune when you are sightseeing. Look around, what are the locals doing? Chances are it is cheap! In Paris Street cafes are filled with people sitting around for hours with their short black or wine, do this! In Chamonix the crepe stand is packed all day long. In Berlin people are eating bratwurst from the local stand with beer that is as cheap as water in Australia. In Amsterdam the locals get around on their bicycles. Another Paris one; everyone is going home with a French stick. Rent Self-catering accommodation with at least a kitchenette. Find accommodation or rooms and rent directly from the owner. I have used this website ‘http://citycentreretreat.com/’ for an apartment in Paris and Berlin. Highly recommend, It was cheaper than a hostel! Find the nearest supermarket and stock up on essentials such as snacks and drinks. Make sandwich rolls (it’s cold so they will keep in your bag) and take them up into the mountains for a snack as you will get hungry.