When in Rome....
Check out the Website of www.Eurocheapo.com for some good suggestions on how to save money in the Eternal City. A lot of them apply to visiting other cities in Italy, too.
Rome is a marvelous city in terms of its cultural attractions and fascinating history. As is these weren't enough, it is also the seat of the Catholic Church and as such attracts millions of pilgrims every year. That means demand for everything to do with tourism is very high, and prices also tend to be expensive, sometimes very expensive.
One article I read said January is the only month of the year when the city isn't overwhelmed by tourists, so it could be a good time to visit if you don't mind cool weather and possible snow.
Ways to save in Rome include eating most of your meals at bars or sandwich shops, or in good weather buying the makings for a picnic at an open market. Don't patronize restaurants with multilingual menus. In a restaurant, omit bread to avoid the charge for "pane e coperto," and drink only table water or house wine. You will get plenty of carbs in your pasta course.
Look for independent hotels and b and bs, not those belonging to chains. Or try staying in a monastery for a restful visit. A good source for the latter is www.goodnightandgodbless, which lists several monasteries and religious guesthouses in Rome. Take public transit rather than taxis whenever possible.
If you happen to be in Rome on May 17, don't miss the Notta dei Musei when many of the city's museums are open all night for free. Be prepared for crowds at this event.
Many of Rome's sights are free if viewed from the outside--the Colosseum, the Forum, the Vatican, the Trevi Fountain, Castel Sant'Angelo, and you can visit most churches without paying admission if you go for a service.