18 Useful Tips for Visiting Iceland on a Budget

Visiting Iceland on a budget
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There’s no denying that Iceland is an expensive place to travel. It’s an isolated island in the middle of the North Atlantic ocean and most supplies have to be imported. The cost of a trip to Iceland is enough to stop many people from visiting. Thankfully, there are still ways to visit Iceland on a budget. In this post, I’ve shared some helpful tips for visiting Iceland on a budget.

When talking about Iceland with friends and fellow travellers, the general consensus is people want to visit there but they can’t afford to. The truth is, there are so many reasons to visit Iceland, but the cost certainly isn’t one of them.

Visiting Seljalandsfoss is a must do on any Iceland itinerary

When planning my solo road trip around the ring road in Iceland, I had to do a lot of planning and get creative to make sure it was possible within my budget.

It’s important to know that however you choose to travel in Iceland, it’s going to be expensive. Yes, there are ways to reduce your costs and save money in Iceland, but it’s still not going to be a cheap trip.

You’ll also have to make some sacrifices to visit Iceland on a budget. This includes travelling in the off-season, staying in hostels or budget accommodation and cooking your own food. To be honest, Iceland isn’t meant to be a luxury holiday. Iceland is all about adventure. It’s an outdoor lovers paradise. It’s filled with unique natural wonders and there is nowhere else like it in the world. The best part is most of these outdoor attractions are free. 

How expensive is Iceland?

Iceland is very expensive. According to World Population Review, it’s one of the world’s most expensive countries.

The cost of living in Iceland is very high, and this does unfortunately mean the cost of visiting Iceland is also high.

Prices of accommodation do fluctuate throughout the year. A hostel dorm room can set you back around $40 USD and a simple room in a guest house can cost $100 per night.

Food is also incredibly expensive in Iceland. A meal out can cost in the region of $30-50 for a simple dish with no extras.

However, there are ways to save money in Iceland. My two-week trip in 2022 cost me £1500 which included flights, car hire, accommodation and all my food (any activities were additional).

There are certainly ways I could have reduced this cost and if you’re travelling with someone else, this halves the cost of transport and accommodation. 

I’ve written the below guide to give you some ideas on how to save money in Iceland. This is a very personal thing and there may be some areas you’re not willing to sacrifice – this is a bucket list trip after all.

Ways to save money in Iceland

Visit Iceland in the shoulder seasons

The summer months of June, July and August are the most popular time to visit Iceland. Visitors want to make the most of the longer days and settled weather. With tourist numbers at their peak during these months, accommodation, flights and transport are more expensive.

To save money on your trip to Iceland, visit in the shoulder season. These are the months of April, May, September and October. There are fewer crowds and accommodation is on the cheaper side.

Visiting Iceland in the winter tends to be slightly cheaper than in the summer. However, many people head to Iceland for the chance to see the Northern Lights. This can sometimes cause prices to spike, especially around Christmas and New Year.

Find the cheapest flights

Return flights to Iceland from Europe or North America tend to range between $250 USD and $600 USD. This depends on where you’re coming from, the time of year, how far in advance you book and how much luggage you choose to bring.

There are ways to help ensure you pick the cheapest flight to Iceland.

  • Try and book your flights as early as possible.
  • Keep an eye out for airline sales. Iceland Air has regular sales throughout the year.
  • Use the Hopper app to track the cost of flights. This useful app can tell you if the flight price is expected to increase or decline.
  • Fly with low-cost airlines. Wizz Air and PLAY are good options.
  • Try to minimise how much luggage you take with you (although if visiting Iceland in the winter months, this will be hard).
Finding cheap flights to Iceland with Icelandair
Flying with Icelandair

Look for cheap accommodation

Choosing cheaper accommodation is a great way to save money in Iceland.

Let’s be honest, you don’t want to spend your entire trip to Iceland inside a hotel room. Iceland is an outdoor lovers paradise. Your days in Iceland will no doubt be spent outdoors and exploring this country. Plus, if you’re doing a road trip, it’s unlikely you’ll be spending more than one or two nights in a single place.

With this in mind, finding cheap accommodation without the frills is a great way to lower the cost of your trip. 

While even the cheapest accommodation in Iceland is on the pricier side, there are some budget options in all the major towns around the ring road. This includes guesthouses and hostels.

If you’re a solo traveller in Iceland, hostels are a great way to meet other travellers. Many of the guesthouses also have a shared kitchen making these a great alternative if you prefer a private room.

The guesthouses and hostels tend to be on the more basic side in Iceland, but they have everything you need. Unless you’re basing yourself in Reykjavik for the entire trip, it’s unlikely you’ll stay anywhere for more than a night or two.

You’ll need to book these guest houses and hostels as early as you can to secure the cheapest prices. I planned my stays around four or five months in advance. I was looking to change my plans slightly about one month before I visited, but everything within my budget had sold out. 

Even by choosing hostels and cheaper guest houses, accommodation took a big chunk of my budget.

Two weeks in May cost me a total of £600. I could have done this cheaper at times but did have a few nights with a private room.

Here are some great budget accommodation options in destinations around Iceland. I suggest booking through either Booking.com or Hostel World.

For more detailed information on where to stay in Iceland, check out my 7-day road trip itinerary.

Reykjavik: the best hostels in Reykjavik are Kex and Hi Loft. You can book these through Hostel World. Aska Apartment and the Berjaya Hotel are also good budget-friendly options.

Golden Circle: Selfoss is a great base for exploring the Golden Circle. This isn’t entirely budget-friendly, but I can’t recommend the Blue View Cabins enough. These lovely cabins come with their own hot tub and everything you need. While they’re not the cheapest option, they’re great value. For more budget-friendly options in the Golden Circle, consider the Asahraun Guesthouse or the Selfoss Hostel.

Vik: the Barn is the most popular hostel in Vik. However, it’s very pricey. Consider the Vik Hi Hostel instead if you want a dorm room. The Prestshus Guesthouse and Hotel Burfell are both great budget options if you want something with a little more privacy.

Höfn: the accommodation options here seemed a little bit pricier so I chose to stay at Seljavellir Guesthouse which is about a 10-minute drive from town. It’s just off the ring road and has some lovely views. Breakfast was also included here. I’ve also stayed in the Hofn Hostel here and loved it.

Egilsstadir: the Berjaya Iceland Hotel is a good budget option with modern facilities.

Myvatn: accommodation in the Myvatn area is a little bit more limited. Berjaya also has a hotel here (with hot tubs and a delicious breakfast).

Iceland on a budget
Berjaya in Myvatn

Husavik: the Arbol Guesthouse is a great budget option. I stayed in a room with a shared bathroom, but it was clean and quiet. The Green Hostel is a great hostel choice.

Kirkjufell: the Grund í Grundarfirdi guesthouse is just down the road from the iconic Kirkjufell mountain. It’s surrounded by incredible scenery. There are different rooms available including ones with shared bathrooms.

Take a towel

This is a random one but take a towel with you to Iceland. Many of the guesthouses and hostels I have stayed in charge to use their towels. Some of the spas and hot springs may do this too.

Consider packing a microfibre travel towel. They are incredibly useful and pack up nice and small. Many of them are also antibacterial so don’t get very smelly.

Consider camping

If you already have your own camping equipment, consider camping in Iceland. There are campsites all around the country which allow tents to pitch up.

Wild camping is illegal in Iceland (whether you’re in a campervan or a tent), so you’ll need to find designated campsites to sleep overnight. These do come with a fee, but it tends to be a lot cheaper than paying for accommodation.

There is an option to purchase the Camping Card which costs $195 USD. This gives you access to about 40 campsites around the country. If you’re doing a road trip longer than a few days, you might find this saves you money. I haven’t personally used this card, but there’s a great guide here.

Hiring a campervan is a popular choice in Iceland. It’s a great way to explore the country and it gives you a lot of flexibility. I’ve yet to explore Iceland in a campervan, but it’s at the top of my list for my next trip there!

Solo travel in Iceland
Solo travel in Iceland

Having not done it myself, I can’t say for sure whether or not a campervan would save you money. I’ve seen arguments for both sides. Looking online, a campervan is A LOT more expensive than a car. For example, a campervan with one of the cheapest rental companies is about $1800 USD more than a car. Unless you were planning to spend more than that on hotels, I’m not convinced a campervan will necessarily save you money.

You could also look at cars with tent roofs. These handy vehicles have a tent on top of them which you sleep in at night. They’re a lot cheaper than campervans, but I’m not sure how driving them in the wind would be.

Choosing car hire and insurance

Hiring a car in Iceland is expensive, as is the insurance that comes with it. Many people believe that the only way to see Iceland is by hiring a car. However, this isn’t true. It’s entirely possible to see Iceland by basing yourself in Reykjavik and doing day tours.

Depending on which tours you do, this has the potential to save you money in Iceland. For example, if you’re visiting Iceland for 3 days, you might find it cheaper NOT to hire a car. You can do day tours to the Golden Circle and South Coast. This will be cheaper than hiring a car, the insurance and the cost of petrol.

If you have decided to hire a car, spend some time looking through the options and working out what the cheapest option is. There are an overwhelming amount of options when it comes to hiring a car in Iceland. I had watery eyes looking through all the companies and trying to work out what suited my needs.

I recommend using Kayak for comparing the cost of car hire in Iceland.

It’s also worth looking at some of the local Icelandic companies which don’t always appear on these searches. I decided to go with Lotus (who were faultless). Once I added on my insurance, I found them cheaper than the larger companies and they had much better service. 

When choosing your car hire, consider which type of car you need. A 4WD will be a lot more expensive than a regular car. If you’re sticking to Iceland’s ring road, a regular car will be fine. Even in the winter, rental cars come with studded tyres so you may not need a 4WD.

If you plan to visit the Icelandic Highlands or drive on any of the country’s F Roads, then you will need a 4WD. I opted for a 4WD as I wasn’t sure exactly what I would be doing. I definitely didn’t need one in the end.

When selecting a car, you’ll also be faced with deciding on which insurance to get. I know this post is about how to save money in Iceland, but insurance isn’t something to skip. If you end up damaging the car, you’re going to be faced with a BIG bill at the end.

I went with the premium insurance and I’m so glad I did. Yes, it was expensive, but it paid off. On my second to last day, a lorry drove past me and threw up a stone which chipped my windscreen. This was covered in the premium insurance so I didn’t have to pay a penny.

Windscreen chip in Iceland
Windscreen chip in Iceland

Even though insurance is expensive, it has the potential to save you a lot of money in the long run.

Get a discount card for fuel

Most car rental companies in Iceland will give you a discount card or key tab. This can save up to 5% on fuel at certain gas stations.

It’s easy to ignore these or forget about them, but they can save you a lot of money. My card from Lotus Rentals gave me 5% off gas PLUS a free coffee!

Save on extras with car hire

Car hire rental companies will try to sell you extras such as Wi-Fi devices and GPS. Consider if you really need these.

If you have a car with CarPlay, you should be able to connect your phone to the system and use Google Maps to navigate around Iceland (check this with your rental company in advance).

Many premium insurance policies also include extras such as GPS and additional drivers, so it might be cheaper just to get this upfront.

Don’t assume you need everything they’re trying to sell you.

Consider hitchhiking

Hitchhiking is perfectly legal in Iceland and it’s a common sight. Many budget travellers opt to see Iceland by hitching rides with locals and other travellers.

Iceland is one of the safest countries in the world and serious crime there is very rare.

I’ve never personally hitch-hiked in Iceland so it’s not necessarily something I’d encourage, especially for solo female travellers. However, hitchhiking is a common way to save money in Iceland.

Up next: is driving Iceland’s ring road worth it?

Cook your own meals

Eating out in Iceland is painfully expensive. Even a simple sandwich for lunch can set you back around $20. Cooking your own meals is a great way to save money in Iceland.

Sure, it does mean you might not be feasting on delicious meals, but Iceland isn’t exactly known for its food anyway so it’s a good area to try and save some cash.

Try and choose accommodation with cooking facilities. Most of the hostels and guesthouses in Iceland have shared cooking facilities. This means you can cook simple meals such as pasta and prepare your lunches and breakfasts.

I found a few of the guesthouses also included breakfast. This is a great way to keep your food expenses on the lower side.

If you’re moving on every day as I did and don’t have consistent access to a fridge, you’ll likely only want to buy items that won’t go off. Here’s a suggested shopping list including some of the essentials I bought for my road trip.

  • Pasta
  • Pasta sauce
  • Cheese
  • Instant noodles
  • Some fruit
  • Bread
  • Peanut butter (and Jam)
  • Snacks
  • Tea bags or coffee
  • Vegetables

Extra tip: bring a freezer block from home to keep your food cool during the day. Most guesthouses had a freezer I could leave it in overnight.

Grab lunch at a gas station

The gas stations in Iceland are in a league of their own. They’re a great place to grab a budget lunch if you haven’t been able to make anything ahead of time.

The gas stations normally have hot food such as hot dogs and burgers available (and they’re delicious). They also sell items such as instant noodles and will fill them with hot water for you.

Selfoss is a great place to stay for exploring the Golden Circle
The Blue View Cabins

Bring basic food from home

A great way to visit Iceland on a budget is to pack some basic foods and bring them with you. I know – it doesn’t sound like the most glamorous or practical method of saving money, but it can help.

You can’t bring any fresh foods into Iceland such as fruit or vegetables, but you can bring in packaged foods. Items such as porridge, pasta, wraps, tea and coffee are a great option.

If you are buying food in Iceland, Bonus tends to be the cheapest supermarket. Kronan is another good option and there are a few dotted around the ring road.

Buy alcohol at the airport

We know by now that Iceland is an expensive country and alcohol is certainly no exception. Most of the beer, spirits and wine in Iceland is imported from around the world making it very expensive.

It would be easy to say ‘don’t buy alcohol’, but if you’re on holiday, it’s fair enough to want a drink.

The cheapest place to buy alcohol in Iceland is at the airport. Once you’ve passed immigration, you’ll walk through a Duty-Free store. When I went to Iceland with my mum and sister, we stocked up on wine at the airport. If you’re planning to drink alcohol while in Iceland, it’s a great way to save money.

Take reusable items with you

Reusable items such as cutlery, tupperware and a coffee cup can help to save money in Iceland.

A thermal flask or mug is a great option for keeping soup warm for your lunch. It also means you can make your own hot drinks and don’t need to worry about buying a coffee every day.

Taking tupperware and cutlery is more about convenience, but it does mean you have the option to take lunches with you during the day.

Iceland has banned plastic bags so take a reusable bag with you to avoid having to buy one. 

Drink the tap water

The tap water in Iceland is some of the cleanest in the world. You don’t need to spend money on buying bottles of water in Iceland.

Take a reusable water bottle with you to help save money in Iceland.

Make the most of Iceland’s free attractions

Once you’ve got your car and sorted your accommodation, Iceland is waiting for you. There are a plethora of free outdoor attractions and natural wonders waiting for you. From powerful waterfalls, exploding geysers and stunning canyons there is so much to see in Iceland and most of these don’t cost a penny.

You could fill your trip with just visiting free attractions, especially if you love hiking. For example, one of my favourite spots in Iceland is Fjaðrárgljúfur Canyon. It’s a beautiful walk to a unique canyon which was used as a filming location in Game of Thrones. The best part is it’s entirely free to visit.

There are a few which do charge a small fee (such as the Kerid Crater or Stokksnes Beach), but it isn’t common.

Fjaðrárgljúfur Canyon
Fjaðrárgljúfur Canyon

Pick your paid activities wisely

It’s no surprise that some of the organised activities in Iceland are *very* expensive. A walk on a glacier can set you back around $100. Decide what you want to do and look for similar, cheaper (or even free) alternatives.

One thing I’ve learnt through my years of travel is you can’t do every single activity, and a lot of the time these activities are really not worth your money. 

Once you’ve decided what activities you want to do, see if there’s a company which offers all of them as a combination pass or package. For example, if you book a glacier walk and boat trip as one, it can save you around 10% depending on which company you book with. Try and choose all your activities before you book any so you can find a company that offers them all and book them as one. Don’t be afraid to email them and ask if there’s a discount. 

Arctic Adventures is a big tour operator in Iceland and offers lots of combination packages. 

Extra tip: showing the receipt of one activity sometimes gives you a discount on others. For example, if you go whale watching in Husavik, you can show your receipt at places such as GeoSea and the Whale Museum to get a small discount.

Here are 16 epic things to do in Iceland, most of which are free including the stunning Studlagil Canyon.

Choose free (or cheaper) alternate activities 

If the cost of the activities has set alarm bells ringing and you’re thinking twice about your trip, don’t worry! Iceland is filled with free things to do. You don’t need to do any paid activities to experience this incredible country.

On my most recent trip, the only activities I paid for were whale watching, the Blue Lagoon and GeoSea. There were a few others I wanted to do, but they would not fit in my budget. 

I’ve listed some of the popular paid activities below with some free alternatives.

Glacier walk

Walking on a glacier is certainly a bucket list activity, but it’s going to take a chunk out of your budget. One of the many incredible things about Iceland is its glaciers. Luckily, you don’t need to pay any money to see one up close. 

I opted against paying to walk on a glacier in Skaftafell and instead hiked to see a glacier in Vatnajokull National Park. The Sjonarsker glacier hike is a 3.8-mile trail which starts at the visitor centre. You follow a well-signed footpath up to Svartifoss waterfall. After this, continue through meadows and you will reach the viewpoint for the Sjonarsker glacier. The views took my breath away. The hike is completely free (but it does cost to park there).

Solo travel in Iceland
Glaciers in Iceland

One of my favourite hikes I did while in Iceland was a hike to see the Flaajokull glacier. I didn’t see another soul on this hike. It was a wonderful route showing off Iceland’s true beauty. The route is just under 4 miles (6.5km) there and back and it’s relatively flat. 

There is a car park just off the ring road between Hofn and the Jokulsarlon Glacier Lagoon. Put Flaajokull via Haukafell into Google Maps and it will take you to the trailhead. It’s a very bumpy road so be prepared. Once you reach the glacier viewing point you can scramble over rocks to get a bit closer.

Note: don’t walk on a glacier without a guide. They can be unpredictable and dangerous. Walking on them can also cause irreversible damage. If you really want to walk on a glacier then book an organised tour with an experienced guide. 

18 Useful Tips for Visiting Iceland on a Budget
Fláajökull Glacier

Boat trip on the lagoon

Many people travel to Iceland to see the Jokulsarlon Glacier Lagoon. It really is breathtaking. There is the option to do boat trips around the lagoon to get you up close and personal with the icebergs. 

This is a costly activity and I’d personally argue that it’s not worthwhile. The lagoon isn’t that big and you can already see huge icebergs close to the shore. You can leave the main lagoon viewing area and stop at one of the many extra viewpoints along the ring road just west of the car park. This gives you views from a different perspective. 

I’m not sure you gain much by riding in the boat. 

Blue Lagoon

Okay… truth time – if there’s one activity you’re going to pay for in Iceland make it the Blue Lagoon. There are other cheaper alternatives such as GeoSea in the north, Sky Lagoon in Reykjavik and the hot springs in Myvatn. The truth is though none of these are the same experience as the Blue Lagoon.

Yes, it’s touristy. Yes, it’s expensive. But it’s one of the few activities I’d argue is really worth cutting into your budget for. It’s a once-in-a-lifetime experience and there is nowhere else like it. 

Having said that, a free (kind of) similar activity is to hike to the Reykjadalur thermal river. The 5-mile (8km) hike takes you up through the Icelandic countryside to a river that is thermally heated. This means you can swim in it and experience Iceland’s geothermal wonders in a natural way. You’ll need to get changed in public though but no one cares in Iceland. 

I don’t think you can compare it to the Blue Lagoon as such, but it’s still a good free alternative (or addition). 

The Blue Lagoon is one of Iceland's top attractions
Blue Lagoon

The Northern Lights

During the winter months, the Northern Lights make a regular appearance in Iceland. There are many tours which take you away from the light pollution to get a better view, but you don’t need to join a tour.

If you have a car, drive to a remote area to try and see the Northern Lights. Most hotels can point you in the right direction of where to go.

Many accommodations also offer to wake their guests up if the Northern Lights appear. This means you don’t need to wait up all night and hope for the best.

Of course, all of these activity options are personal. It might be you’ve always dreamt of walking on a glacier or relaxing in the Blue Lagoon.

Tip: using Get Your Guide is the best way to book activities in Iceland

Summary: can you visit Iceland on a budget?

It’s entirely possible to visit Iceland on a budget, but that budget is going to be higher than many other popular destinations. Iceland is an expensive country whether you’re living there or travelling there. To save money in Iceland, you’re going to have to make some sacrifices when it comes to eating out, accommodation quality and activities.

How to save money in Iceland
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