How to Visit Iceland on a Budget

The land of fire and ice was on my travel radar for years before my mom and I finally decided to go. Known as one of the most beautiful countries in the world, Iceland is regarded for its stunning glaciers, turquoise lagoons, and unique black sand beaches. After some research, we discovered that exploring the country came at quite a price. Literally.

Along with its Viking heritage and lush mountainsides, Iceland also has a reputation for being expensive. Crunching the numbers for our budget came as a bit of a shock, especially since I had just returned from two months of travel in Southeast Asia – a budget-minded traveler’s dream.

After reading some blogs, I felt blown away at what others had budgeted for a 9-day trip to Iceland. I was determined to cut costs somewhere so that I could visit Iceland on a budget, and this post showcases how I did it.

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Iceland Budget Tips

Cheesing in front of the magical Snaefellsjokull National Park in Iceland. © Casie Frederick

4 Ways to Visit Iceland on a Budget

Fortunately, flights were surprisingly inexpensive. We found roundtrip tickets from Boston to Reykjavik for around $400, which is cheap for an international flight! Aside from scoring cheap flights, here are my tips to visit Iceland on a budget:

1. Bring Your Own Food

The idea of bringing my own food seemed a little over the top, but Iceland food prices can add up quickly (a burger costs $26!). We packed a carry-on bag with some basic breakfast items such as oatmeal, granola bars, and instant coffee. Mac and cheese and noodle dishes made great dinners while we camped. We stopped for fresh bread and produce during our trip, but it was nice to already have staples like crackers and nuts on hand.

Related: The Ultimate List of Healthy Travel Snacks

That being said, trying the local cuisine is a vital part of an authentic cultural experience anywhere you go. So, definitely splurge on dinners or lunches occasionally. Try local delicacies like langoustine (Icelandic lobster), fish stews, and lamb dishes. Some other favorite local foods like hot dogs and Skyr (Icelandic yogurt) are relatively inexpensive anyway!

Last but certainly not least, don’t forget to bring a reusable water bottle from home. The tap water in Iceland is crisp and delicious and totally safe to consume! There’s no need to purchase bottled water while you travel, which is a huge money-saver.

Not comfortable drinking straight from the tap? Try a Grayl and drink safely from anywhere.

2. Rent a Car in Iceland

Driving in Iceland
Toyota Yaris we travelled the Ring Road with. © Casie Frederick

This, to me, is the best advice to visit Iceland on a budget! We were hesitant to rent a car at first, mainly because we were anxious about driving in an unknown place. A bunch of questions I was too embarrassed to ask anyone but Google flooded my mind: What side is the steering wheel located on? What are the rules of the road? What do the different signs mean? Which side of the road do they drive on?

Related: Renting a Car in Europe: 3 Things You Need to Know

Listen to me when I say that if we can do it – anyone can. Don’t ask me to drive you through Boston, but around Iceland’s Ring Road (the national road that runs around the entire country) – you’ve got this.

Traffic is essentially non-existent, except for in Reykjavik, and even there, it’s completely navigable and stress-free. If you have any uncertainty, there are countless helpful Youtube videos that show any possible situation, such as how their roundabouts work and how to cross one-lane bridges. Plus, the fact that you could technically drive the entire Ring Road in 15 hours somehow made the journey seem less intimidating. Trust me, though, you’ll want to take your time.

Driving Gives You Freedom to Explore

And explore, we did. By taking 9 days to travel around the country, we had more freedom than if we had booked a tour, and we saved money by doing so. Planned tours are an amazing option in some cases, but we opted out because Iceland is so easy to navigate, find parking, and scope out where you want to go. Almost all of our sightseeing and excursions in Iceland were free, such as driving the Golden Circle, which encompasses Gullfoss Waterfall, Geysir Geothermal Field, and Thingvellir National Park.

Related: One Week in Portugal in a Rental Car

MAPS.ME is an incredible and free app that we relied upon heavily for this trip. It provides maps and directions without internet or cell service, just make sure you download the app and the specific country (and regional when applicable) maps you’ll need while still connected to WiFi.

Even with the cost of gas and insurance, we saved money by renting a car, because we were able to avoid individual day trips out of Reykjavik that would take us to the places we could drive to ourselves. If you plan to do lots of hiking, sightseeing, and waterfall-chasing, definitely consider renting a car.

Car Rental Insurance in Iceland

If you choose to rent a car, I highly recommend getting insurance. Potholes, flying sand from the southern terrain, and wind yanking doors back are all common culprits for damage to your rental car. There will be options to purchase bundle insurances when you’re renting a car that will cover you if anything happens. After tireless research, we went with Blue Car Rental (you can walk to it right from the airport) and had an awesome experience.

Related: What You Need to Know About Travel Insurance

3. Camping in Iceland

Camping is a fantastic way to see Iceland on a budget, just be aware that even in the “summer” months, it can get chilly at night. The weather is quite unpredictable, too. If you’re up for the adventure, you can either pack a tent as we did or rent one when you get there.

We packed all our gear, but bundles of sleeping bags and other equipment are available to rent upon arrival (so are RVs, if that’s more your style). Designated campsites range in price anywhere from free to $30, and many areas have indoor bathrooms and kitchen areas. Oh, and WiFi!

We made reservations ahead of time at many of our campsites, but also sprung for some spontaneous ones that popped up in our guidebook. Either way, there’s nothing more relaxing than waking up to crisp air and a beautiful view. Just make sure to pack layers for sleeping, as well as an eye mask. The sun only sets for about three hours from May to August, so you’ll most likely be falling asleep while it’s gloriously light outside.

Related: Three Things to Help You Sleep On the Road

Camping in Iceland
A peaceful campsite in Iceland. © Casie Frederick

4. Seek Alternative Accommodation in Iceland

We visited Iceland in late July, which is a prime time for tourists. Even months in advance, many hotels were either booked or astronomically expensive (at least for our wallets). We splurged on a hotel one night there, but other than that, we either camped or found other lodging options.

Hostels and Airbnb are great budget options that won’t cost $500 a night. Yes, one of the hotel rooms we looked into really was that much. However, since the country is so small and July is peak season, a lot of the Airbnbs we researched were booked already. Make sure you plan ahead!

Click here to save $55 on your first Airbnb stay.

Sleeping Bag Accommodation

Another unique option we came across is called “sleeping bag accommodation.” I didn’t know about this option ahead of time, but after discovering it while there, I would recommend it to anyone!

The way it works is some farms, inns, hostels, and guesthouses offer an area/room (usually unfurnished and shared) for a low price. It’s nothing fancy, but it gets you indoors with a roof over your head! One of the places we stumbled across had a shared kitchen and bathroom with another group and a bedroom with bunk beds to ourselves. The bedding was not included, but we were prepared with our sleeping bags.

Related: 21 Budget Tips That WILL Save You Money On The Road

One of my favorite memories of the trip was a totally serendipitous night that we had planned to camp, but it was raining heavily and winds were strong. We were driving along the Ring Road and debating how horrible it would be for both of us to sleep in the cramped car instead of pitching a soggy tent. That’s when we came across a sign for lodging, which we decided to investigate. That night we slept in an old gymnasium converted to accommodate travelers. We had access to showers, a kitchen, WiFi, and most importantly, protection from the storm. All for around $20!

Although adventuring and being spontaneous is always fun, you can map out your sleeping bag accommodations in advance, too.

Ring Road Iceland
The black pebble beach, Djúpalónssandur, in Western Iceland. © Casie Frederick

Iceland has now moved from my bucket list to my favorite destinations list, and I will definitely go back – I still have to catch those northern lights!

Don’t feel discouraged if you keep hearing that it’s too expensive; Iceland on a budget is absolutely doable. We managed to have a wonderful time and did not miss any experiences on our 9-day trip, even while staying within our budget. Whether you’re on a budget or not, I can promise that your time will be priceless.

By Casie Frederick