Money-Saving Tips for Traveling in Iceland on a Budget

We did something kind of stupid. We saved one of the most expensive countries in the world for the very last leg of our 10 and a half month journey. But we scored a super cheap flight back to the U.S. with a layover in Iceland, and we just couldn’t pass up the opportunity.

We decided the only way we'd be able to spend time in this notoriously expensive county would be to do it the absolute cheapest way possible. And you know what? We ended up spending far less than we expected! (Check out our detailed budget in Iceland here.)

We’ve put together some of the best money-saving hacks that helped us keep our costs down in Iceland. We’re sharing them with you so that you can follow in our footsteps and visit this beautiful country on a budget!

1. Go camping

Don’t get me wrong – there are several guesthouses all around the country that look fantastic – but they’ll cost you. From what we gathered, a dorm bed at a nicer hostel will cost around $35 per person – and that’s on the lower end. We’ve even seen dorms beds upwards of $50 per person*.

And let's not get started on more traditional hotels. The simplest, cheapest (and of course worst rated) hotel rooms we found were around $75 to $100 per night. (Much more than our budget allowed.)

Camping, on the other hand, is a great option to save money and allows you to explore the country in depth. Plus, you won't have to worry about getting to a certain town by the end of the day.

So what are the rules with camping in Iceland? You’re legally allowed to camp most anywhere in the country. That said, no one really wants to camp right beside Ring Road (the busiest road in the country). In addition, much of the land in Iceland is privately owned so you must get permission from the owner before hammering your stakes into the ground.

The best places we found to set up our tent were in the many campgrounds around the country. (They are located in basically every town along Ring Road.) There are bathrooms and often hot showers and cooking facilities. Some campsites are free to use, but others charge a small fee which typically ranges from $9 to $13 USD. The most expensive campground we found was in Reykjavik and was about $18 USD per night... But hey, you're still saving at least $17 per night compared to those dorms beds.

*Hotel prices vary on the season.

2. Research your rental car

All rental car companies in Iceland are not created equal. Do your research and find one that suits your needs and budget. Like we mentioned, we were on a teensy-tiny-itsy-bitsy budget, so we went with the very cheapest company in Iceland. We booked with a company called SADCars, and despite the name, we had a very happy experience. They're the cheapest because they rent out older cars that are still in good condition. We rented a compact Hyundai i10 with over 100,000 km, but it was perfectly fine for what we needed. 

At SADcars, just like any rental company, they offer additional types of insurance, such as gravel and windshield protection or theft protection. We decided not to get any additional coverage because we stayed clear of the really rough roads on our 6-day route. (And we read on several sites that theft insurance in Iceland is just silly to buy.) The SADcars employee told us they don't worry about little nicks or scrapes that other companies might charge for because every car in Iceland will get a few dings here and there. 

Tip: In the winter when the roads are often icy, you might want to look into renting a car or Jeep with 4x4-drive to deal with treacherous conditions.

Bonus: One plus about getting a rental car is that they typically pick you up at the airport free of charge. If you use the shuttle bus to get to Reykjavik instead, you'll pay anywhere between $18 to $22 USD per person. Just be sure that your rental car company includes this service in the cost.  

3. Make your trip to Iceland a layover

Due to the curve of the earth, the shortest route for almost all flights between North America and Europe is right over Reykjavik. This means you can get some killer deals on your airfare if you make your trip to Iceland a layover!

Some airlines have programs where you can buy a ticket from the U.S. to Europe with a multiple day layover in Iceland. And sometimes buying a ticket with a layover in Iceland is often cheaper than a direct cross Atlantic flight! Crazy, huh?! Check it out for yourself on Skyscanner. We flew with WOW Air and Icelandair and had good experiences with both.

4. Research your route

Gas is expensive in Iceland. Like really expensive. In August 2016, one liter of gas was about 191 Krona ($1.66 USD), which is about $6.27 per gallon. Renting a car is without a doubt the best way to see this island country, but don’t forget to factor in the price of gas to your total cost. Be smart about your route so you don’t backtrack too much. And don’t forget, the gas prices increase during the summer tourist season.

5. Go grocery shopping

Sitting down for a meal in Iceland will make your wallet noticeably thinner. If your budget affords, splurging on a fresh seafood dinner may very well be worth it to you. But since we’d been traveling for nearly 11 months and our idea of a reasonably priced meal is laughable in Western Europe, we stuck to buying our meals at grocery stores.

The two most well-known budget grocery stores in Iceland are Bónus and Kronan. We found that Kronan had more variety than the former, but was perhaps a tad more expensive. 

Something to consider is that you will most likely be making your meals with a small camp stove, so you’ll want things that cook quickly. Also, we packed quite a bit of non-perishable food items that we bought in the UK because we had heard groceries can be expensive in Iceland. If you're able to pack some things with you, you'll be saving even more money. (Below, we have marked the items purchased outside of Iceland with an asterisk.)

Here are some food items that worked well for us:


  • Muesli and yogurt: This was our go-to breakfast. We bought some nectarines and bananas in Reykjavik and added those to make it more of a meal. (We also bought eggs and hard-boiled them, but it took a really long time, so we wouldn’t exactly recommend that!)


  • Bread and peanut butter/jam/Nutella: We got some hearty wheat bread and had it for lunch with jam or Nutella*. No stove required for this one!
  • Cup of Soup*: All you need is boiling water to make this afternoon snack that’ll warm you up in the frosty Iceland temperatures! (We saw Cup of Soup at the grocery stores in Iceland, but it was more expensive than the stuff we brought from the UK.)
  • Or one of the meals below...


  • Cous cous*: It cooks super quickly and can be dressed up in many ways. We added fresh zucchini, tomatoes and seasoning for a yummy meal. We brought some packets of cous cous in different flavor combinations (purchased in the UK) so we didn’t have to bring much seasoning with us.
  • Can of beans + Can of corn: This might sound weird, but one of our best meals was a can of kidney beans, a can of corn and a packet of seasoned cous cous. It cooked in less than 5 minutes and was super filling (and cheap!).
  • Indian meal packet*: We’ve bought these before and were surprised by what a hearty and quick meal they make. Paired with cous cous, it was ready to eat in under 5 minutes.
  • Ramen: We aren’t particularly fond of ramen, but it cooks quickly. Someone we met swore by cooking the noodles, draining them and serving it with pesto sauce (which we saw at the grocery store in Iceland for just a couple dollars).


  • Trail mix*: A standard in any car ride or hiking trip, and since we were doing both it was a no-brainer. 
  • Wholegrain Cookies: Good for snacking!
  • Dark Chocolate*: Just because you deserve it.

An additional note on food:

We heard that gas stations in Iceland are known for tasty and cheap food – namely hot dogs – but we were pretty surprised at the prices. At one gas station restaurant, we saw a meal of a hot dog, fries and a soda selling for 1,400 krona (a little more than $12 USD). Though it’s not exactly a bank-breaker, it certainly is more than we wanted to pay for a gas station hot dog, thank you very much.

Sure, eating at gas stations is a cheaper alternative to traditional restaurants, but if you’re really tight on money, we wouldn’t recommend relying on them for budget-friendly meals. See how much we spent on meal on our detailed Iceland budget.

6. Rent WiFi

One of the smartest decisions we made in Iceland was to rent a pocket WiFi from Iceland Camping Equipment. It’s a little device that uses SIM card cell data to create a WiFi hotspot anywhere you'd normally have cell service.

This came in handy so many times throughout our trip. We were able to look up directions to our next destination and find nearby campgrounds. Plus, it allowed us to upload pictures to Instagram even while camping! And more importantly, if we had an emergency and were stranded somewhere, our WiFi would have allowed us to call for help (and our travel insurance would have had us covered!) For just 7 euros (about $7.80 USD) per day, this handy device was well worth it!

7. Bathe where the locals do

Going into Iceland, we both had full intentions to go the world famous Blue Lagoon. But after reading reviews online, we saw a common theme in what people were saying: “It was great, but I wouldn’t do it again," or “Nice and relaxing, but overcrowded and way overpriced.”

And when we looked up the price, we were shocked. The cheapest ticket during peak season is 50 euros (and must be booked in advance)... which is quite a bit more than we were expecting. We decided it wasn't worth it to us to spend the equivalent of $110 USD for the two of us to sit in a hot man-made bath. (That said, many people don't want to visit Iceland without going to this famous landmark, and it's certainly not a bad idea if your budget allows. We just found that there are just cheaper – and more authentic – ways to experience a hot spring in Iceland.)

We started looking online (using our handy pocket WiFi) and found loads of other alternatives to the touristic Blue Lagoon that we felt were more our style. In nearly every town there's a hot spring or pool that is used mainly by locals. Some are free and others have a small fee (though it'll certianly be far cheaper than the Blue Lagoon). 

When we were searching, we found one that was 5 minutes down the road from us (near Skogafoss Waterfall). It was an open air, naturally-heated swimming pool in a beautiful green valley. And it's FREE. Take that, Blue Lagoon! We describe our experience and how to get there on Day 5 of our Complete Itinerary.

8. Buy alcohol at duty free

Alcohol in Iceland is heavily taxed, and is therefore pretty expensive (at least compared to the U.S.). A pint of beer will cost around $7 USD at a bar, which isn’t terrible, but when there are two of us and we each get a few, the night could add up very fast. Cocktails are even more expensive. So if you plan to do some drinking in Iceland but don’t want to spend top shelf prices for bottom shelf value, buy your supplies at duty free.  

We knew this going in to the airport but didn’t know what to get. So where did where did we look first? The discounted items, of course! We came across a bottle of Disaronno (we had no idea what it was!) for 14 euros. It seemed like a good deal, so it became our unofficial drink of Iceland! 

If you want to save even more money, bring your own booze! That's right – you're allowed to pack alcohol in your checked bag. The Keflavik Airport website does a good job explaining the specific customs regulations, but basically you’re allowed to bring one liter of spirits and either one liter of wine or 6 liters of beer. 

And if you're on an uber-tight budget, just refrain from drinking all together. DUH.

9. Drink from the tap

When we first arrived in Iceland, we stocked up on a pack of bottled water and immediately regretted our purchase. The tap water is delicious and FREE. Fill up a reusable water bottle at gas stations or campgrounds to avoid wasting plastic and to save some money.

10. Take advantage of free activities

One really amazing part of traveling in Iceland is that most of the attractions are absolutely free. That’s right – you don’t need to pay an entrance fee to view the iconic waterfalls or to walk along the ice lagoon. There are incredible viewpoints throughout the entire country and all you have to do is drive up to them. If you follow our 6-day Iceland road trip itinerary, you won't have to pay a single entry fee!  

There are a lot of tempting tours out there that I'm sure are ahhhhh-mazing. But you're reading this article because you're on a budget, and I'm going to be blunt: The tours in Iceland aren't made for thrifty travelers.

Some of these tours boast once in a lifetime experiences, so if your budget allows, by all means splurge! But choose one that's worth it. The Golden Circle tours, for instance, can easily be replicated in your own rental car for a fraction of the price, so it's better to treat yourself to something you can't do independently. 

Other Ways to Save if You're Flexible

Visit during low season

Visiting Iceland during peak season means you’ll likely be paying top dollar and missing out on deals that are available later on in the year. For example, rental cars are almost half the price in the winter than they are in the summer season. We heard all seasons are beautiful in Iceland, and each has its own draw. We would really love to go back during the winter (aka cheaper!) months.

We think the warmer temperatures of summer make it a great time to explore Iceland, too. We may have paid more money in some categories, but being in Iceland in August meant that it was possible to save money by camping. (We may not have been so comfortable in a tent during the frigid winter months!)

Try a ride share

If you're a solo traveler or have extra space in your rental car, there are a few ride share forums for like-minded people to meet up and explore Iceland together. Just post where you want to go, whether you have a car or not and a little description of yourself. It's a win-win for everyone: solo travelers get a ride and drivers can split gas money (plus, this means are less cars on the road so Mother Nature is happy). One of the more popular rode share forums is called Samferda (which means "traveled").


We saw quite a few people with their thumbs up on the side of the road, so it seems that hitchhiking is not uncommon in Iceland. I imagine it would be a very safe country to hitch a ride in, and since transportation and gas can be so expensive, it would save you quite a bit of money. Plus, there aren't all that many roads in Iceland, so chances are if a car is headed in the right direction, you'll be able to get where you need to go.

That said, in order to hitchhike in Iceland, you need to be very flexible. If you're relying on strangers for your transport, you can't really have a fixed itinerary, and you need to have quite a bit of extra time as a buffer. You have to kind of go with the flow and hope you see the things you have in mind. Another thing to think about is your luggage. If you plan to hitchhike, you shouldn't carry much with you since someone may not have much space. Many cars in Iceland are small and people often travel with camping gear, leaving little room for you, dear hitchhiker.

Lastly, if you're hitchhiking alone you'll have a better chance of being picked up than if you're with another person. And a couple has a better chance than 3 hitchhikers. It could be an amazing adventure and a cheap way to see this notoriously expensive country, but since we only had 6 days in total and wanted to see a lot, it just wasn't a good option for us.

One last tip

Download the app Be Iceland for maps and descriptions of nearby attractions. This free app made sure that we didn't miss some of the lesser-known sites along the way. The only thing to know is that it only works when you are in WiFi. Our handy little pocket WiFi device (#6) allowed us to check the map and see what was around us whenever we wanted.

We'd like to send a big thank you to Iceland Camping Equipment for providing our amazing rental equipment and making our trip to Iceland extra special. We'd also like to thank SADCars for discounting our car rental price. As always, our opinions are our own. 

Do you have any other tips to save in Iceland? Or have you tried any of these budget hacks before? We'd love to hear your experience traveling Iceland on a budget in the comments below.