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By Monika

Iceland on a Budget: All You Need to Know to Plan an Affordable Trip.

Think Iceland is out of reach because of the price tag?

I get it – this stunning country has a reputation for being expensive. But here’s the good news: with a little planning and a few smart travel choices, you CAN experience Iceland’s wild landscapes, waterfalls, and volcanoes without breaking the bank.

In this guide, I’ll show you how to plan a trip to Iceland on a budget, sharing tips, tricks, and personal advice to help you save on everything from food and accommodation to car rentals and activities.

Let’s make your Iceland adventure affordable AND unforgettable!

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1. Book your flights during a sale

Many airlines run sales, during which you can get discounted tickets for a limited time. If your schedule is flexible, try to book your flights for the “sale dates”.

If you have a set vacation time, try to plan well in advance to get the best price. Off-season is generally less expensive than the summer months.

For tips on choosing the best time to visit Iceland, read my “Tips for First-time Visitors” article.

How to find out about airline sales?

Sign up for their newsletter or follow them on social media.

Helpful hint: Iceland-based airlines, like Icelandair and Play, are good ones to follow.

2. Choose your accommodation smartly

Book well in advance

Iceland has become a very popular destination and affordable places to stay may sell out fast, especially in the most traveled areas, like the South Coast.

For less-traveled areas like North Iceland, there just aren’t as many options available.

🏨 Check your Iceland accommodations options on Expedia, Booking.com and Airbnb.

Definitely book early if you’re a large group!

So book at least 6 months in advance if you can, to snag the best deal. Even sooner if you can!

Rooms accommodating larger groups/families are scarce. If you want to stay together, book early or be prepared to book multiple smaller rooms, which may increase the cost.

Our experience: for our August 2023 trip I was booking accommodations in September 2022, and I grabbed the last family room at Hotel Jokull in Höfn for our 4-person group.

Consider apartments vs hotels

Apartments can accommodate bigger groups and have kitchens (more on why having one is beneficial in the food section below)

Helpful hint: if you’re booking your places to stay far in advance, often before you even have your flights, please try to book them with FREE CANCELLATION. Usually, booking through Booking.com or Expedia will have that option until quite close to your arrival date. “Book now, pay later” option is even better, so you don’t have to deal with refunds if you adjust your itinerary and your plans change.

Consider camping

If you’re traveling in warmer months, camping may be a great way to save money AND have a flexible schedule.

You don’t have to pre-book in advance, and campsites cost is $15-20 per adult per night. Some include showers, and some charge extra for using facilities.

READ MORE: Camping in Iceland: A Complete Guide and Tips from My Campervan Adventure.

Considering renting a campervan? Read our honest Happy Campers review!

Go for the basic accommodations

Choose places to stay that have the basics you need, like the right number of comfortable beds, a bathroom and a kitchen area. Forgo the hot tub, a pool, and other upgrades. If you spend your days exploring that’s all you need to have a meal and rest, right?

Consider hostels and farm stays. They are often affordable, plus you get to interact with the owners and other travelers adding to your experience.

We stayed at a farm in Vik and Möðrudalur and loved it. I also spent a night at Start Hostel near the airport and had a great stay.

Helpful tip: If you prefer hotels to other options, try to choose a budget hotel with breakfast included so you have the first meal of the day taken care of.

3. Save money on food

Food expenses can add up during your trip, so here are some tips on how to save some money on food in Iceland:

Limit eating out

Prepare your meals at home (at your apartment, Airbnb, campsite, etc).

Shop at local grocery stores like Bónus and Krónan and stock up.

Pack snacks and drinks for the day, prepare sandwiches for lunch, and have a nice hot dinner at the end of the day. Or have lunch out and cook dinner at home. You can buy easy-to-reheat meals at the store, like my favorite lamb soup from Bonus!

Helpful hint: if your days are going to be long, choose lunch as your “eat-out meal” and have a late dinner at home, as many restaurants close early in Iceland. Don’t get stuck like we did in Höfn during our second trip (read day 5)

Helpful hint: budget-friendly grocery stores open late and close early, so plan your shopping wisely or you’ll need to use the more expensive options, open late at night, like we ended up doing in Akureyri (read day 1)

Bring some food from home

Of course, you want to try local cuisine when you travel, but to keep your trip on budget, consider bringing some snacks from home: granola bars, nuts, packets of peanut butter etc.

To see what foods I recommend bringing with you, check out my practical, budget-friendly packing list for Iceland.

Don’t dismiss gas station food

Gas stations in Iceland often have affordable, fresh made food that’s quick, convenient and can get you back on the road to explore in no time!

My favorites? Fish’n’chips from N1 in Kirkjubæjarklaustur (see the picture below) and soups and burgers from Freysnes, near Hotel Skaftafel. But the absolute winner was Issi Fish & Chips next to Orkan gas station near Keflavik Airport – one of the best I’ve had!

You can always just grab a delicious Icelandic hot dog!

Don’t buy bottled water

Tap water in Iceland is the cleanest water you can get. You can even drink glacial water directly from the rivers and streams during your adventures, so save money and don’t buy bottled water.

You can bring a reusable water bottle and just fill it and any stop you make or just buy your first set of drinks (water, juice etc.) and save the bottles for later.

Don’t buy alcohol

Aside from bars and restaurants, alcohol in Iceland can only be purchased at designated liquor stores. It’s very expensive to purchase it there, so if you’d like to grab some, do it at the duty-free store (the section for arriving flights) before you exit the airport.

To find out what other common and potentially costly mistakes to avoid when planning your first trip, read my guide to what not to do in Iceland.

4. Rent a car

While it may be tempting to just book tours and take the hassle of planning the days and figuring out the logistics of visiting each Iceland destination, compare the costs before deciding.

I’m a big fan of renting a car, as I like to explore on my own schedule, however there are places you can only visit with a tour, those are the ones I’d recommend trying to fit in the budget. (more on that at the end of this article)

Choosing a road trip versus a tour also depends on how big your group is. For a family of 4, the cost of one or two day tours may amount to the cost of a rental car for a week. 

You’ll find lots of helpful information on renting a car in Iceland in my guide to choosing the right vehicle for your trip.

Shop around for the best price, but book with reliable, well-reviewed companies and get full insurance for peace of mind and to avoid potential high costs in case of an accident or damage to the car.

To give your Iceland budget a boost, I have an instant 5% discount for any vehicle reservation with Blue Car Rental and Lava Car Rental made through my links – just click on the pictures below ✨

Reserve your car early to get the early booking discount. It may also be worth contacting the rental company directly and asking if they have any additional coupons that can be applied. Oftentimes, you may be able to get a free wifi box or a discount for the second driver.

I highly recommend booking from a company offering free 24-hour cancellation – it will save you money and hassle in case of any change of plans.

5. Choose free activities

There are so many free attractions highlighting the beauty of Iceland that it should be fairly easy to put a budget-friendly itinerary together. 

There are many free things to do in Reykjavik that will give you a taste of the city without breaking the bank.

It gets even better once you leave the capital!

Nature-based attractions along the Ring Road, like waterfalls and hikes are free, some don’t even have a parking fee (more on parking fees and tips below).

Try to research popular day trip destinations like the Golden Circle, Snæfellsnes Peninsula or the South Coast and visit on your own instead of booking a tour. They are easy to navigate, and you’ll have the freedom to create your own itinerary.

6. Pay for parking timely! 

Some destinations do require a parking fee, usually between 750 – 1000 ISK (about $6 – 8). There are a few that charge up to 1400-1600 ISK.

Download the Parka.is app as it is the most commonly used parking payment service in Iceland. Pay your parking fees right away to avoid getting a parking ticket (typically about $30, but could be more)

Helpful tip: there is only one fee for visiting Diamond Beach and Jökulsárlón Glacier Lagoon, and if you visit Skaftafel Visitor Center the same day, you’ll get a 50% discount at the second location.

7. Don’t speed to avoid speeding tickets 

For the same reasons, don’t speed! Speeding tickets are expensive and vary from about $200 to $700. Stick to the speed limit!

You’ll find more helpful tips for staying safe on the road in my guide to driving in Iceland.

8. Go for the Blue Lagoon alternatives 

Visiting a hot lagoon spa in Iceland is on most visitors’ to-do list, and the Blue Lagoon seems like the most popular choice. While it is the iconic Icelandic lagoon, it isn’t inexpensive.

You don’t have to give up this experience, as there are many good alternatives. Check out my absolute favorite Secret Lagoon (in the photo beloe), one of the oldest swimming spots in Iceland and while not free, the authentic experience is definitely worth the 4200 ISK (about $33).

Public swimming pools in Iceland are also a great alternative and a chance to connect with the locals. The cost is 1000 – 1300 ISK (about $8-10).

Would you like a free alternative? Go for a wonderful short hike to a one-of-a-kind geothermal river in Reykjadalur (Steam Valley) or visit Selajvallalaug Geothermal Swimming Pool.

Wherever you go, bring your own quick dry towel! Towel rental fees at paid lagoons are about $1000 ISK or more, and the free hot pools simply don’t have them!

9. Pack light but smart 

Choose the right items to pack for your trip – pack light, but make sure you have all the essentials. Avoid buying anything but food and souvenirs in Iceland to save both time and money. Bring your hiking shoes, jackets, bathing suits etc.

Need help packing the right things? Check out my packing list! I use it each time I travel to Iceland.

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If you have some money left if your budget after following all the tips above, here are some ideas for activities that will give you a unique Icelandic experience and, in my opinion, are worth splurging on:

Which activities to splurge on?

• GLACIER HIKE – standing on top of a glacier is an amazing experience, but for safety reasons only possible with a guide. We did a glacier hike on Solheimajökull glacier during our first trip and absolutely loved it.

• HORSEBACK RIDING TOUR – Icelandic horses are just gorgeous and getting to interact with them during a riding tour is definitely worth if if you have room in your budget. I recommend the Red Lava Horse Riding Tour near Reykjavik.

• GLACIER LAGOON BOAT TOUR – you can visit a glacier lagoon without a boat tour, but there is something special about being on the water among floating icebergs – a very unique experience. Fjallsárlón Lagoon tours cost a little less than those at Jökulsárlón Lagoon.

• ICE CAVE TOUR – visiting an ice cave is still on my “to-do list,” but it seems like a great thing to experience in Iceland.  

Bonus tip: visit Iceland on a stopover

Consider visiting Iceland as a stopover on your way to another country and that way you can visit two countries for the price of one airfare. Icelandair offers that option.

👉 Don’t forget TRAVEL INSURANCE! I don’t travel without it. Get a quote from my personal #1 choice – Travel Guard – or check more options here!

Quick Budget Wins

Want fast savings without sacrificing the fun? Start here:

• Book flights during a sale and book with flexible dates
• Stay in Airbnbs with kitchens so you can cook and save on meals
• Buy groceries & pack lunches for big daily savings
• Rent a car if traveling with 2–4 people – cheaper than multiple tours
• Skip the Blue Lagoon – Secret Lagoon or free hot springs offer a similar experience for less
• Buy alcohol at the airport duty-free shop if you plan to drink
• Refill a water bottle with tap or glacial water – don’t spend money on bottled water
• Camp or stay in farm guesthouses for a unique and low-cost experience
• Avoid parking/speeding tickets – pay for parking and follow speed limits

🛜 Stay connected during your trip with an eSIM like Airalo, Saily or Sim Local!

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You may also like:

• 6-day Iceland Itinerary (How to See the Best of Iceland in a Short Time)
• 30 Best Things to Do in Reykjavik, Iceland.
• Fjaðrárgljúfur – How to Visit Iceland’s Fairytale Canyon
• Golden Circle in One Day – Full Guide to the Main Stops and Best Detours.
• Snæfellsnes Peninsula – A Complete Guide and Top Things to See.
• How to see the Northern Lights in Iceland.
• Reykjadalur Valley – a Beautiful Hike to a Hot River (+ Tips for the Best Experience)
• How to Visit Glaciers in Iceland – Need to Know Facts, Safety Tips and Best Tours.
• Dyrhólaey, Iceland – the Iconic Arch with a Hole and More!