I removed the Czech Republic from the second edition of The World’s Cheapest Destinations and put it into the honorable mentions because Prague has gotten too popular for its own good and is now far from being a bargain, especially if your budget is in dollars. (Moravia is still pretty cheap, thankfully.)
With some advance planning and good advice though, you can find ways to have fun for less and do more than get sloshed on good pilsner.
National Geographic Traveler has put together a nice rundown on Free Things in Prague. They’ve got it categorized by attractions, culture, food/drink, and more. Some highlights include free hours at the National Gallery, the House of Beer Museum, nights where nightclubs don’t charge a cover, and the scoop on a free shuttle to the supermarket.
The food and drink section is pretty depressing to read though since free refills on coffee somewhere is apparently so rare that it needs to be highlighted. No wonder those European backpackers love breakfast in America!
[flickr photo from St Stev]