How to Travel Iceland on a Budget in 2023
It is widely accepted that Iceland is one of the more expensive holiday destinations. This is true for various reasons, although locals don’t feel the punch as much since their salaries reflect the cost of living here on the island. But how expensive is it to visit Iceland? Would it be possible to travel Iceland on a budget?
And is there a way to stretch your Iceland vacay budget further? We answer all these questions and more and help you have the trip of a lifetime without having to remortgage the house.
How Much Does an Iceland Trip Cost?
To manage expectations, we want to share a general budget for you to work off of. Your ultimate budget for Iceland will depend on the number of days you plan to spend there and will dictate the length of your vacation. If the below outline is a bit too rich for your blood, you might need to tighten your belt for a bit before visiting the island:
Transport (excluding the flights to get to the island in the first place):
Bus Fares = $10-$15
Domestic Flights = +/- $70-$100
Car Rental = $45-$200 per day + the cost of gas
Accommodation:
A general average of most accommodation options (except camping) = +/- $115 per day
Food:
Eating In = +/- $15 per person per day
Eating Out = +/- $80 per person per day
A Combination of Both = +/- $50 per person per day
Activities:
General Average of Entrance Fees, etc. = $30 per person day
Guided Day Tours = $65-$250 per person per tour
How to Travel Iceland More Cheaply
You can have an affordable Iceland vacation without depriving yourself and living off of dry breakfast biscuits By following some of our helpful tips below, you’ll be able to save some money and get more bang for your buck when traveling Iceland on a budget:
Choose When to Visit Carefully
As with most countries in the world, there is a very clear period that sees a drastic increase in visitors. These periods are referred to as peak seasons, and here in Iceland, that is during our summer months (June to August).
With the peak season crowds come peak season prices. If you are planning to travel to Iceland on a budget, keep in mind that prices during peak season can drain your funds much faster.
Go Camping
This is a great way to save on costs during our busy summer season. You can cut accommodation costs quite dramatically – from $60 per person per night to just $10-$20 per person per night. You can actually take your savings one step further and purchase a Camping Card for just €159.
This card will then give a family of 2 adults and up to 4 children access to various campsites across the island for up to 28 nights. You also don’t need to be Bear Grylls to go camping in Iceland. If you don’t really like “roughing it”, you can just rent a campervan in Reykjavík and then you can go camping in comfort.
Join HI (Hosteling International)
If you really prefer four walls around you, we suggest that you join Hosteling International. Especially if you will be visiting the island for quite a while, or you tend to travel often throughout the year. HI Members pay an annual fee, but the 10% discount you receive at hostels all across the world, quickly makes up for the membership fee. To join, you simply need to register online.
Cut Your Trip Short
Generally, we’d advise that you save up a bit more and then travel to the island, but for some that simply is not possible. Consider having a shorter but quality trip to Iceland if you're on a budget instead of an extended one.
But, once again, if at all possible, please try to visit for at least a week since there is so much to do and see here. Many attractions are completely free of charge – but more on that a little later.
Let Your Rental Agency Hook You Up
Rental agencies have very close business relationships here on the island. Most of the time, they receive all sorts of special discounts and vouchers to share with their clients. So, ask your rental agency about any additional perks they may have to offer. Since these discounts can range from accommodation to attractions and activities and even gas. All these small savings could add up to quite a lot.
Drink at Home
We get it; you’re on vacation, and you want to kick back. But, unless you book a spot on one of our local craft beer tours, we strongly suggest that you lay off the alcohol during your trip. Alcohol is extremely expensive here on the island. And it is something that you should definitely take off the menu when traveling Iceland on a budget.
In fact, your drink can often be more expensive than your meal! So, rather stick to our high-quality water and grab a drink when you’re back home.
Prioritize Free Attractions
There is actually quite a lot to see and do on the island that won’t cost you a cent. You can visit the impressive waterfalls in Iceland, go explore Iceland’s national parks or take a relaxing soak in one of the Iceland hot springs. And this is just the tip of the iceberg of everything you can experience here on the island without having to dive deep into your pockets.
Be Selective of Where You Fill Up
Gas doesn’t cost the same at all gas stations here on the island. In fact, gas prices in Iceland can differ dramatically, depending on the brand of the gas station. Whether it’s a self-help gas station or one with attendants can also add up to the price.
Although options may be limited in remote areas of the island, it's worth talking to your rental agency and locals. They'll help you find affordable gas stations for refueling.
Scout for Specials
Okay, so this is good advice, no matter where you find yourself in the world. If you have to buy groceries, a two-for-one special can save you a few bucks. If you have to choose accommodation, opt for the one currently offering free breakfast along with your stay.
But keep in mind that a special is only a special if it’s something that you have to buy. Loading your trolley in Laugavegur street with end-of-season fashion item “specials” does not count as saving money.
Use Your Own or Public Transport
From the moment that you leave Keflavik Airport, you will have your pick of transport, from rental cars and public buses to airport shuttles and taxis. If there’s one piece of good advice we can give you, it’s to stay clear of the taxis.
This mode of transportation is so expensive that it will quickly eat up that carefully curated vacation budget. Stick to the local bus service (very affordable) or rent a campervan that takes care of both your transport and your accommodation.
Band Together
Two heads really are better than one. Most things on the island, whether accommodation or activities, are cheaper when done as a couple or in a group. You will see the difference in cost when comparing the price per person sharing with that of a solo traveler. This can sometimes be problematic, especially in a world rife with Digital Nomads and others who opted for a working holiday.
But this is when it’s a good idea to band together. If you’re staying in a hostel, grab a few like-minded people and book something as a group. Or see if you can connect and make friends at one of the local events and cut future accommodation, food, and other expenses by sharing the costs.
Pick Up that Hitchhiker
It’s actually not a strange sight to see someone asking for a lift next to the road here in Iceland. And unlike the hundreds of Hollywood horror movies you’ve seen, this lift will not end in your dismembered body.
Iceland has officially taken the title of the safest country in the world for the 15th consecutive year. So, picking up a hitchhiker here will either help you make that friend we were talking about earlier. Or help save on gas money since hitchhikers generally contribute to the ride.
Get a Reykjavík Card
If you intend to spend some time in the capital city, you need to get your hands on a Reykjavík Card. A Reykjavík Card will give you instant access to a number of places such as the Reykjavík Zoo and the National Museum of Iceland at no extra cost.
And you’ll also get unlimited hop-on-hop-off privileges when it comes to the Reykjavík City buses. So, instead of continuously paying for bus fare after bus fare and attraction after attraction, a once-off investment in a Reykjavík Card will give you access to so much more and save you a lot of money.
Opt for the Cheap Iceland Tours
We’re not asking you to hike a glacier with Eddie the “tour guide” that’s standing with his handwritten “business sign” on the corner of the street, but there certainly are more affordable Iceland tours when you really start shopping around. Don’t just jump at the first tour that comes around. Some of these prices really differ quite dramatically.
For example, you can go on one Northern Lights tour that costs $60, whilst another charges $600. You’ll need to take into consideration what exactly each tour entails and whether it’s worth the price. And if both offerings are the same, simply choose the more affordable option (as long as it’s a reputable company or guide!)
Cut Out the Middleman
Booking directly for tours, accommodation, and activities in Iceland is recommended. It'll help you avoid paying the extra fee charged by middlemen such as travel agencies and accommodation platforms.
If you find accommodation on a booking platform or an activity package on a travel site, rather Google the contact details for the accommodation or company hosting the activities and personally make arrangements. They might even offer you a further discount or tell you about a special they’re running that those booking online are not eligible for.
Think Long-term When it Comes to Transport
As you already know, we are big advocates for having your own transport here on the island. Not just because it’s an affordable option, but there really is no way that you can explore the island properly without it. Especially not in the more remote parts of the country.
But if you will be sticking to the city and its immediate outskirts, the most affordable option will be the public transport system in the form of the buses.
This is where you will have to weigh up your options because continuously buying one-way fares can become expensive very quickly. You’ll need to do the math based on your itinerary and plan. You'll then see whether purchasing a weekly or a monthly pass might not be a better and more affordable solution.
Check Your Ego When Renting Your Vehicle
When you’re traveling Iceland on a budget, it’s not the time to rent the biggest vehicle possible if you’re traveling solo or rent the meanest-looking 4x4 when you’re going to be driving around Reykjavík. This will only lead to additional and unnecessary costs. Stick to what suits your needs and is the more economic option.
Pay Only for Essential Insurance
During the winter months, all sorts of extra gadgets and accessories and insurance policies should be added to your car rental bill. But if you’re coming to visit Iceland during the summer months, some of these may not be needed.
So, have a chat with a few locals and your travel agency, and only get the essentials. You’ll find that the essential insurance policies are mandatory here on the island, so most of them are included in the cost of your rental anyway. But things such as sand and wind insurance should be considered based on the month and season.
Avoid Temptation
If you know that you’re someone who can’t say no to a cute outfit, then don’t go into the shop. If you tend to over pack, bring a small suitcase with limited space. It'll help you avoid the impulse shopping and stay within your flight's weight restrictions. Managing your weaknesses is key when traveling Iceland on a budget.
Just Fill Up a Water Bottle
You will get some pretty odd stares if you buy bottled water here on the island. Because of our glaciers, Iceland has some of the highest quality water in the world and will probably put your best bottled water to shame.
Buying bottles of water is completely unnecessary and is money that you could’ve used on other more unique and exciting experiences on the island. Just bring a water bottle with you and refill it with tap water along the way.
Be Picky
Just as the money you spent on bottled water could’ve gone for more meaningful things, the same applies to the rest of your expenditures. Why spend money on eating out when you can do that at home? You could’ve used that money to do something uniquely Iceland, such as exploring the ice caves.
So, be picky when it comes to what you spend your money on, and don’t get swept up in the moment, only to regret it later.
Traveling Iceland on a Budget is Easy in 2023
As you can see, the cost of living in Iceland might not be what you are used to, but it is possible to have a cheap Iceland vacation without it feeling like you are cheating yourself out of an experience. By following our simple tips and tricks in this article, you’ll be able to extend your holiday budget much further and have an incredibly memorable trip.
So, pick the perfect time for you to visit the island, rent a campervan in Reykjavík, and start your road trip with our cost-saving tips in mind and stop at all the wonderful free attractions along the way.