Below I have put together a list of the budget style accommodation in Montevideo. To get on this list, properties had to qualify by offering accommodation for under US$40 per night (double share). To help with location, have a look at the Google Map I created, where each Hostel has been marked out. This is a great way to compare spots and will hopefully help you with choosing your accommodation in Montevideo.

Che Lagarto Hostel – Ciudad Vieja, Montevideo

This place is perfectly located on Plaza Independencia in Montevideo.
Mixed Dorm rooms from US$14, plus there are private rooms available

El Viajero – Ciudad Vieja, Montevideo

Well positioned right in the heart of the Ciudad Vieja, within walking distance to the Mercado del Puerto, Museums, Nightclubs and Plazas
Dorm Room from US$15

Red Hostel – El Centro, Montevideo

Situated a block away from the main street of Montevideo, 18 de Julio, although I wouldn’t consider it well located (it would be around a 15 minute walk to the Ciudad Vieja), it is highly ranked amongst other Hostels in Montevideo for their services and facilities.
Dorm Room from US$16

Posada al Sur – Ciudad Vieja, Montevideo

Situated a couple of blocks from the Mercado del Puerto in the Ciudad Vieja, this is a small, consciencous property who use the proceeds from the Hostel to promote sustainable tourism throughout Uruguay.
Dorm Room from US$18

Boulevard Sarandi Hostel – Ciudad Vieja, Montevideo

Situated right on Sarandi, the heart of Ciudad Vieja, you will be walking distance to a lot of the great attractions in Montevideo. This is an old home, converted into a Hostel, so it has a comfortable, homely appeal.
Dorm Room from US$14

Planet Montevideo Hostel – El Centro, Montevideo

Set three blocks back from the main street, 18 de Julio, should have the benefit of being a little quieter than a more centrally located hostel. There are heaps of comfy common areas and an airconditioner in each room.
Dorm Room from US$14 per night

The Green Hostel – Ciudad Vieja, Montevideo

Only a short distance from the Mercado del Puerto in Montevideo, the main feature of this place is their awareness of the environment. These guys do what they can to minimize their impact on the environment including recycling, solar hot water and energy efficient lighting
Dorm Room from US$14 per night

Unplugged Hostel – Pocitos, Montevideo

Situated in the safe, leafy suburb of Montevideo, Pocitos, you can enjoy the tranquility of the area, and yet still be fairly close to shops, restaurants and bars. The buses are nearby to take you into the City Centre & Ciudad Vieja
Dorm Room from US$14 per night

Montevideo Hostel – El Centro, Montevideo

Everything is just a few blocks away from here – La Rambla, 18 de Julio & Plaza Independencia are all around 3 blocks walk from the Hostel.
Dorm Room from US$15 per night

Punta Berro Hostel – Pocitos, Montevideo

Located in the leafy, safe suburb of Montevideo, here you are only a couple of blocks from La Rambla. Enjoy the tranquility, while being close to some of the best eateries in Montevideo. This is a clean and cosy place to call home while in Montevideo.
Dorm Room from US$15 per night

El Viajero Downtown Hostel – El Centro Montevideo

Located just a few blocks from 18 de Julio, the Hostel has 12 private ensuite rooms so you can enjoy the atmosphere of a hostel with the comfort of a hotel. Great living spaces both inside and out.
Dorm Room from US$16 per night

Piedras de Afilar Art Hostel – El Centro Montevideo

A colonial style house converted into a Hostel, here you are only a few blocks from 18 de Julio. This is one of the cheaper spots in Montevideo.
Dorm Room from US$11 per night

Palermo Art Hostel – Palermo, Montevideo

This is a really trendy looking place with a bar, pool, terrace and art display. Although not very well located in comparison to other hostels in Montevideo, this looks to be a destination in its own right.
Dorm Room from US$14 per night

Palacio Hotel – Ciudad Vieja, Montevideo

This is a basic Hotel with a prime location in Montevideo, right near the Peatonal Sarandi in Ciudad Vieja, you are within walking distance to a lot of the attractions of Montevideo. This is a Hotel, rather than a Hostel, but the prices are so reasonable, if you are looking for private rooms with ensuite at a budget price, this could be a good option.
Single and Double Hotel Room from US$30 – 35 per night

Una Noche Mas B&B – Punta Carretas, Montevideo

This is a very beautiful home away from home located in the leafy suburb of Punta Carretas in Montevideo. Very cosy with exception service. This is not a party style location, but more of a homely style location where you can relax and feel at home.
Single share from US$38 per night, Double Share from US$20 per night

If you know of anywhere that I have missed from the list, that meats the criteria of under US$40 per night (double share), please let me know in the comments below. I would also like to do reviews on individual spots, so if you have stayed in any of these places, and would like to offer your opinion, please let me know – I would love to hear from you.

Hasta pronto!