Lisbon has a reputation for being the "cheap" Western European capital, and it mostly earns it — but only if you avoid the traps built for the cruise-ship crowd clustered around Praça do Comércio. A realistic budget traveler can comfortably run this city on $38–55 a day including a bed, food, and transit, without feeling like they're missing anything.
Where the money goes
A hostel dorm bed in a well-reviewed spot in Graça or Alfama runs $15–22 a night. A day pass on the Viva Viagem card covering trams, the metro, and the funiculars costs about $6.80 and is worth it the moment you ride Tram 28 once for the view and then switch to the metro for everything else, since the tram is slow and mostly a tourist novelty after that first ride.
Neighborhoods worth your nights
Alfama is the postcard, but Graça one hill over has the same views from Miradouro da Senhora do Monte with a fraction of the tour groups. Príncipe Real is quieter and closer to the good bakeries. Skip staying directly in Baixa — it's convenient but louder and pricier for what you get.
Food that doesn't dent the budget
A pastel de nata at a proper pastelaria costs about $1.20, not the $4 charged near Belém's tourist queue. Lunch specials (pratos do dia) at neighborhood tascas run $7–9 for soup, a main, and a drink — look for handwritten menus with no English, which usually means locals actually eat there.
Takeaway: Buy the Viva Viagem card on day one, stay one hill away from the main sights, and save your restaurant budget for lunch specials rather than dinner menus aimed at tourists.