How to Travel Iceland on a Budget

The simple truth of life is that Iceland is gorgeous, but not cheap. Hotels, tours, restaurants – all this can break your bank ruthlessly. However, if you possess a certain set of skills, including camping, cooking your own food, driving on unpaved roads and using a map, you can see a lot without spending too much. Let’s see how you can cut down your expenses in every travel category.

Accommodation

The cheapest way to sleep in Iceland is to camp. You can bring your own gear (tent, mat, sleeping bag) or you can rent it in Reykjavik. Even if you rent everything, camping would still be cheaper than even staying in guest houses.

Designated camping grounds are everywhere, and usually cost between 1500 and 2200 ISK (12-18€) per person per night. There are both places for putting up a tent or parking a camping van if you prefer to sleep in your car. You can expect to find a shower (maybe even with hot water), a toilet and a kitchen. There may or may not be stoves, but running water and tables are a safe bet. You can access electricity and put up your tent on a flat ground, usually protected from the wind. A lot of camping sites offer additional services, like washing your clothes, for a fee.

Camping close to Gljúfrabúi waterfall

You can further save money if you camp in the wild. Now, this is tricky as you can only do it for one night if you’re not in a national park territory and if there is no camping in reach. When traveling around Iceland, we adopted a system of staying at camping grounds only every second night to have a shower and charge power banks. In total, we spent 11500 ISK (90€) per person for 10 days’ worth of accommodation.

If even camping costs are too high for you, you can always try Couchsurfing, but this way you won’t see much of the island that lies far from the places people live. Some people also volunteer at the farms where they provide accommodation and food in exchange for help with cattle.

Getting around

The cheapest way of going around the island is to simply hitch-hike. The hitchhikers we met claimed that the waiting time can be anything between half an hour and 4 hours. It’s much better in summer when the flow of tourists is bigger. Hitchhiking is a good option for popular tourist routes such as the ring road, but on the wild unpaved roads leading to the inland one car per hour is counted as high traffic, so your chances are meager.

The second cheapest way is to go by bus. Tough Icelandic 4WD buses go even on unpaved roads, and you can reach most of the destinations with them. In summer, you can buy a bus pass that will cover all your trips in a certain region. If you take a bus twice every day, it’s a good deal. The catch here is that in non-summer months there are fewer buses, and some routes close completely.

The ideal way to enjoy the complete freedom while exploring Iceland is of course to rent a car. If you take a 4WD model, you can drive almost anywhere on the island, and if it’s a camper car with a heater, you are also guaranteed a warm sleeping place anywhere you end up for the night. Check out the road conditions online before heading anywhere.

Unpaved road leading to a glacier

Renting a car is expensive, and so is gas, but you can opt for a cheaper and older model, for example at SADcars to lower your costs. It’s actually better to take a well-used car, as new scratches are less visible on it. Our beaten Suzuki Grand Vitara served us well and brought us back alive, even though the handbrake didn’t work. We paid 100000 ISK (770€) for 10 days of using it, including insurance.

Note that you are recommended to buy several insurances when booking a car: sand and ash protection, gravel protection etc. You WILL need it, as surroundings in Iceland are quite harsh, and renting companies like to charge you for every scratch if you’re not insured. You can even buy water protection if you want to cross a lot of rivers, but at 30€ per day… just don’t go into big rivers, OK? You can also skip theft insurance, as this doesn’t ever happen on such a small island, but do take “Super CDW” insurance to lower your risks should something bad happen. Buying a third-party insurance, for example, here, can lower your risks even further.

Gas in Iceland costs about 200 ISK (1.57€) per liter, so for ten days we spent 53700 ISK (430€) on gas. It is not little, so check how much your car of choice needs before renting it and maybe opt for a more economical one. Gas stations are frequent on the ring road and in the cities, but you won’t see them inland. So fill up your tank before turning into the wild and maybe fill up your extra fuel can too. If you need to wash your car before returning it, look for an Olis gas station with a self-service car wash – they will have everything you need.

Crossing small rivers

For those who want to lower the cost of driving in Iceland, try putting an advertisement on a carpooling web page for your trip. You can meet some awesome people and share the cost of car rental and gas!

Food

Eating out is really expensive in Iceland, so it’s best to cook your own food. Bring a pot and a portable gas stove with you or rent them in Reykjavik, as some camping grounds don’t have a stove. You can buy cooking gas at every gas station with a shop (2500 ISK/19.7€ per 0.5l), but it’s best to stock up in Reykjavik, as it’s cheaper. For example, Icewear sells 0.5l of gas for 1500 ISK (11.8€). 0.75 liters is well enough for a 10-day trip. We also liked to brew coffee in the morning and have our thermoses filled up to skip buying coffee at gas stations.

Cooking our lunch on a stove in the car trunk with a glacier view

The cheapest place to buy food is at one of Bonus stores around the island. You don’t need to buy water, as you can refill at every camping site or in mountain rivers. Tap water is clean and tasty. Alcohol taxes are very high in Iceland, so bring your poison from Duty-Free at the airport or skip drinking altogether.

If you are lazy to cook all the time, the tasty Icelandic hot-dogs with crunchy onions are the cheapest takeout you can get. You can buy them at almost every gas station or in the special hot-dog booths in cities.

In total, we spent about 11700 ISK (93€) per person for 10-day’s worth of food, and we also splurged on lamb meat and drinks in Reykjavik for an extra 9700 ISK (77€) per person. Sorry, not sorry!

Drinks and snacks in Reykjavik

Sights

Finally some good news for a budget traveler! Most of the natural sights in Iceland are completely free, including the famous Golden Circle ones! Sometimes the parking close to a point of interest can be paid, but nobody stops you from parking a bit further away and walking. Speaking of walking, you can skip the guided tours, as the hiking paths are usually well-marked, and you can easily follow them by yourself.

Marked path leading to Eyjafjallajökull 2010 eruption site

If you want to soak your tired bones in the famous Icelandic hot baths, our suggestion is to skip the Blue Lagoon. It’s expensive and crowded. Instead, go to the lesser-known Myvatn baths. They are ⅔ of the Blue Lagoon price and are nearly empty after 10 p.m.

These were the basics that will hopefully help you plan your own budget trip to Iceland. If you have any questions left, fire them out in the comment section and we’ll answer! Next time we’ll tell you about must-see sights around Iceland. Stay tuned!