Managing bag space and Pokemon storage can get monotonous really fast. Being a free to play player who just started out or someone who doesn’t play Pokemon Go all that often may not know where to start. Below is a guide for item bag management aimed at newer and casual players.
Knowing what’s valuable vs not

The general rule of thumb is to not throw anything away until you rank the value on it. Some consumables are easier to replenish than others. All types of pokeballs can be easily replenished through research tasks, friend gifts and Pokestops for example.
Berries can be replenished in a similar way along with medicine (some will be slower than others). Note: do not throw away golden razz berries and silver pinap berries – these are harder to get!
Other items that you want to keep are your TMs, modules, evolution items, candies, poffins, incubators as they are harder to find and obtained through research task rewards.
Optimizing item types

As you gain more levels you will start accumulating more similar item types. Keeping potions might not be as helpful to you as hyper potions for example. In the case of having max revivals, you don’t even need to use potions. So why carry stacks of items that are worse than others if you don’t use them?
I personally delete potions as soon as I get any and keep mostly max revivals and max potions. Knowing what item is more useful to you is key. Just remember that these items might be harder to replenish at lower levels so having revivals and hyper potions might make more sense if you are level 25 and below.
Pokeballs aren’t as important since you will likely be using them up on Pokemon based on CP anyway. Berries on the other hand are different, generally want to use silver pinaps and golden razz berries on special occasions. Just don’t need to stack too many razz and nanab berries if you aren’t a compulsive catcher.
How to go over cap

Pokemon Go is luckily forgiving at points with item bag space. There are particular instances where you can go over your maximum capacity. Just don’t keep it that way long term or you might lose out on getting items/rewards.
Field research, Raid rewards, and Special research (and Time Limited) will give over the cap once you claim the items. Items from team rocket battles, spinning at a pokestop and the shop will not be obtained if you are at full capacity.
Friend gifts can’t be claimed if your item bag space is full, but if you have 1 free space you will be able to claim everything from that gift even if it goes over the cap.
Plan carefully when nearing your item bag space cap. Spin at the Pokestop, or open your gift from your friends before claiming rewards that will go over the cap anyway. Just remember that you will eventually have to clear it.
Upgrading item bag space

Eventually you will want to upgrade your item bag space. The best way to do this without using real money is to farm pokecoins at Pokemon Gyms. You can earn 50 pokecoins max per day (8 hours). Eventually the coins will accumulate to buy 50 extra item bag space with 200 pokecoins.