Iceland has one of the highest costs of living in the World and is famously known as an expensive destination to visit. While accommodation, food and activities in some European cities tend to be catching up with Iceland’s prices, the island still remains a destination that isn’t quite affordable for everyone.
In this article, I will be sharing my best tips to help you visit Iceland on a budget… No hitchhiking or Couchsurfing tips here. I will focus on how to reduce your spending, while still ticking off once-in-a-lifetime experiences, being time efficient, comfortable and self-sufficient.
Iceland on a Budget – Best Tips to save money in Iceland
1. Consider Camping
Camping is the least expensive way to visit Iceland but you will need to rent or bring your own camping gear and budget your transportation around the island.
Renting a car comes definitely with high costs, while public transport will require you to be flexible and patient. The buses outside of Reykjavik mostly drive from town to town and do not always reach easily the main touristic areas. The same goes for hitch-hiking… do not consider it if you are on a tight schedule.
This being said, renting a camper van is in my opinion the best way to travel in Iceland on a budget.
You will have the freedom to travel to the places you want, on your own schedule and without breaking the bank. Though, you will still need to stay in the campground every night as wild camping isn’t allowed. However, campsites remain inexpensive compared to hostels, hotels or guesthouses.
Tips for extra savings: If you decide to rent a camper van, make sure to book it from a company at the airport or nearby with a free shuttle. That will save you from paying the €22+ (on-way…) airport shuttle to Reykjavik. Also, choose a manual Camper van if you can as the Automatics are more expensive. Finally, skip the 4×4 unless you plan to visit the Highlands. You will still be allowed to drive on some gravelled roads, but not the F-roads.
2. Prefer a Self-guided trip
If you plan to explore Iceland for a week or more it is definitely cheaper to self-drive than take several guided tours from Reykjavik. Even if you fly in for a long weekend to only visit the golden circle and blue lagoon, a camper van will certainly be a lot cheaper than paying for your accommodation in Reykjavik, the guided tours and all the other extra costs such as restaurants or airport shuttle.
However, if driving a camper van is not for you, then it might be worth comparing the costs of a rental car vs the organised tours. I would recommend laying out all your options depending on how many people are travelling with you, how long you are staying in Iceland and what you want to visit.
Saving tips: You can easily split the cost of a rental car if you travel as a group.
If you want to rent a car in advance, we would recommend using Discover Cars. The best part about Discover Cars is that you get full coverage insurance for less than €7 a day! You can also compare all the companies in the market, choose the type of car you want and see all the most recent customer reviews before making a booking. On the website, you can easily narrow your search price to find the best deal within your budget.
BEST ONLINE CAR RENTAL COMPARATOR – DISCOVER CARS
When booking a rental car in Iceland online, we recommend using Discover Cars because they offer Full coverage for less than €7. It is one of the best rental car comparators out there!
For those who don’t want to drive at all, I have a dedicated article here to all the best budget day tours from Reykjavik.
Take a tour if you can’t do otherwise: There are some sites and activities that can only be visited with a guide for safety reasons, such as exploring Ice caves or hiking on a glacier. These are amazing activities to do in Iceland during the winter but you will need to budget for them. Actually, on this subject, check out our post about Exploring Vatnajokull National Park.
If you cannot spare the budget for such activities, focus on all the other free activities. And there are plenty! The country is a haven for outdoor enthusiasts with lots of hiking trails and incredible waterfalls you can visit on your own. Here are a few articles that can help you with this:
As a first-timer on a budget, focus on the free activities and maybe one or two paid activities such as the blue lagoon or whale watching. You can drive the Golden circle on your own and the south coast is the perfect place to start your Icelandic exploration! I have a 7-day self-guided itinerary to the south coast of Iceland that can help you prefer it, and also one for the Golden circle.
You can still come back in the future at a different time of the year to do different activities like the glacier or snowmobile!
3. Buy Duty-Free Alcohol
If you want to travel to Iceland on a budget, think about alcohol twice. Alcohol in Iceland is highly taxed and with the cost of import and transport, buying beer, spirit or wine can be one of your biggest expenses… Since Iceland is not part of the EU, you should get the cheapest fare duty-free at the airport, so think about picking up your beverage of choice before boarding.
If you aren’t able to bring any alcohol with you, there is a small duty-free shop at Reykjavik airport. It is located right before the baggage claim area. This will be your last chance to buy cheaper alcohol in Iceland.
Alternatively, you can have a dry holiday or buy non-alcoholic beverages. The Supermarkets in Iceland only sell non-alcoholic beers and are easy to find around the island. If you still need to purchase alcohol during your trip, look for the Liquor stores called “Vínbúðin”.
4. Cook your own meals
Cooking your own meal vs eating out will definitely help you save money.
Avoid booking hotels, and prefer, guesthouses with a kitchen. Alternatively, campervans rental come with all necessary utensils to cook (even a gas stove) and most campgrounds have outdoor facilities to clean up your dishes. Some even have a heated indoor kitchen with a stove.
Since you will more than likely have a check-in bag, bring essentials from home so you don’t have to buy them in Iceland. For instance, I would recommend bringing stuff like spices, salt, porridge, snack, chocolate etc.
Extra tips: Most Camper van companies will have areas with dry leftovers from other travellers such as oil, vinegar, pasta, etc.
Bonus (big pink pig logo) is the cheapest supermarket but they are mostly found near Reykjavik. In the countryside, look for Kronan or Netto if you can’t find a Bonus.
If you are into coffee and have some of the tools at home such as a plastic V60, Clever Dripper or an AeroPress, take them with you… You will save €4-5 per coffee.
5. Look for Free Activities
There are a lot of free things to do in Iceland. As a matter of fact, most tourist attractions and sites such as waterfalls, beaches, monuments and geothermal sites are generally free. The only fee you may have to pay is the parking.
You can easily fill up your trip with outdoor activities that do not require paying for anything. If you enjoy geology, hiking, birdwatching, soaking in hot water springs or looking for northern lights, this is the place to be without spending a cent on lifetime experiences!
For those who want to chill out in a hot water spring and spa, remember that Blue Lagoon is not your only option! In fact, most towns have their local hot bath you can enter for a small fee.
Saving tips: Bring your own towel to reduce the cost and enjoy a real Icelandic soak!
If you still want to visit the Blue Lagoon (I think it is worth it), secure the cheaper rates by booking in advance and directly on their website. Aim for an early time slot as they tend to be less expensive. From what I have seen, the entrance fee starts at 58€ per person but you can stay as long as you want. You also have 1 hour to arrive at the lagoon from the time you have booked.
Pss!!! Free activities are easy to find in Iceland, but if I have a recommendation it would be to not forget to treat yourself. There are incredible activities and sites that you can only experience or visit with a trained guide for safety reasons… Hiking on a glacier, visiting an Ice cave or snorkelling in Thingvellir’s tectonic fault are such amazing experiences that are worth the splurge.
6. Head to Iceland during the off-season
It is cheaper to visit Iceland during the shoulder seasons and in the winter. Basically travelling in Iceland on a budget will be easier anytime but June, July and August are the most popular and of course, most expensive months of the year. Everything from accommodation to flight rates and guided activities is expensive in the summer due to the high demand.
Extra tips: Prefer a trip in early September or the end of May if you can, the weather is still good and the days are long enough to explore the island.
Although, don’t deny winter just yet! For sure, the days will be shorter but cocooning in the van with a book while waiting for the northern lights to show up is a great way to relax on your holidays! Of course, Iceland under a blanket of snow is magical and a must-see in my opinion. Just make sure to pack your bag for Iceland with all the essentials!
If you still want to travel during the summer, consider travelling there in May or early June.
7. Drink Tap water
Bottles of water are surprisingly expensive in Iceland. But the good news is that tap water is safe to drink throughout the Island. Bring your own reusable water bottle and fill it at any cafe, petrol station or campsite.
You can also drink water from rivers, glaciers and waterfalls but as a rule of thumb, always be aware of your surroundings and avoid water that has gone through farms.
8. Use discount codes & vouchers
Discounts and vouchers are great to save and travel in Iceland on a budget.
Ask your rental car or camper van company if they have a fuel discount card. The small round chip is usually attached to the car keyring with the logo of the petrol station company. They will give you a 3 to 5% discount. You can also often pick up a discount card directly at the counter if you don’t have one provided by your rental company.
Costco in Reykjavik (there is only one) is the cheapest petrol station in Iceland. Avoid filling up your entire tank near the airport… you may just top up a bit before dropping off your vehicle but prefer a petrol station near Reykjavik.
Pss!! Check also if your car or camper van rental has any offers with local companies. For example, Happy Camper has a leaflet with coupons and discounts for several guided tours, museums and restaurants. I got 20% off an ice cave tour and glacier hike thanks to these coupons.
9. Visit Iceland as a Stopover
From Europe, and even the US you can find cheap deals from airlines like Play. Make sure to check the luggage’s additional costs as that tends to add up and be more expensive than a flight with Icelandair. Always compare prices on the airline’s website or by using Google Flight and Skyscanner.
Travel tips: Of course, having flexible travel dates will allow you to strike the best deals.
If you are planning a trip to the US from Europe or vice versa, a stopover is a great way to visit Iceland for a few days without any extra flight cost. The stopover is usually free and you can stay for up to 7 days in the country before catching your next flight to your main destination. Icelandair offers layovers as part of their transatlantic flights.
ARE YOU PLANNING A TRIP TO ICELAND?
We have a lot of articles about travelling in Iceland and add new ones each month. Check out our latest guides below to prepare for your trip…
- 10+ Must-See Waterfalls in Iceland
- Best Day Trips from Reykjavik
- Self-Drive Guide to the Golden Circle
- 5 Beautiful Black Sand Beaches
- Top Day Hikes in Iceland
- Iceland on a Budget
- Exploring Vatnajokull National Park
- 7-day Road-Trip Itinerary to the South Coast
- 10 best hot springs in Iceland
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About the Author
Jen is the Funder, Author & Photographer behind Talesfromthelens.comJen has lived for the past 15 years across Oceania and Ireland while also travelling in Latin America, North America, and Europe. She has visited more than 65 countries and set foot on every continent in the world! She is a coffee nerd, passionate about photography, wildlife, and outdoor activities.
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