If you haven’t already, also check out my posts on Driving Iceland’s Golden Circle, Guide to Hiring a Car in Iceland, Chasing the Northern Lights in Iceland and Driving Iceland’s Ring Road in Winter.
One of the things I read about Iceland before arriving was how expensive it is. And you know what? It can be expensive. But so can every other country. If there’s one thing I’ve learned while travelling the world is that there is always a cheaper way to travel a country and the way of doing it might not always be obvious. So I’m here to tell you just how it is possible to travel Iceland on a budget.
Transport
The first major expense when visiting Iceland if you want to get out of Reykjavik is transport. I have seen some websites recommend catching the bus around the island as a cheap alternative to tours. But the problem with catching a bus is that you are stuck when you arrive at each of the towns you plan to visit. And the bus doesn’t stop at the wonderful waterfalls or ice covered landscapes along the way. Catching the bus around Iceland is an awful idea, because you will have to pay for tours once you reach each town if you want to see the natural beauty of the place.
The cheapest way to get around Iceland is to find a cheap rental car. I managed to get my near new rental car for €20/$22/£16/AUD$30 per day. Even petrol wasn’t that expensive because the fuel efficiency of the car was incredible — about 4.8L/100km (more than 50mpg). If you’re travelling as a couple that is just $11 per day plus a bit of petrol. I only spent 16,660ISK ($131/€117/£92/AU$174) on diesel for the entire 1400km trip. This was at the extreme end of how much you would spend on petrol per day because I drove further than most people would. That’s $9 on petrol per day per person.
Transport cost per day – $20
Accommodation
You can really burn through cash on accommodation in Iceland depending on where you stay. Firstly, if you camp in random spots around the island, there is no accommodation cost whatsoever. Things means bringing your own tent and sleeping bags and pitching at rest areas and other spots along the side of the road. Easy to do, but not everyone’s cup of tea, especially in winter. But entirely doable! $0
Let’s just say you’re like me and you prefer to have a roof over your head, you’re going to have to find hostels. And there are lots all around the island, even in small towns. Because of this, you are going to need to plan your itinerary based on where these hostels are, because outside of these areas, accommodation can be quite pricey, comparatively.
The cost of a standard hostel, depending on how early you book and the time of the year will set you back $20/€18/£14/AUD$26 for a dorm bed. You can often get a private room for 2 for slightly more than this.
Accommodation cost per day – $20 (or free if you camp)
Food
Food in Iceland can be expensive, but you have to be selective about what you want and where you buy it. Some places charge about $5 for a large pre-made sandwich and some places $3.50. Some places can sell you a whole loaf of bread for $2… So if you want to make your own sandwiches, you can really save a lot of money. Just make sure you choose the cheaper ingredients for your sandwich as some items are horrendously expensive and others not so bad. You can easily get away with under $4 per meal if you’re buying your own groceries and making sandwiches, eating pasta and doing the cheap eating thing. That’s $10 per day for food, but some people not used to travelling on a budget may want to put aside a little more than this.
Food cost per day – $10
Activities
The great thing about activities in Iceland is that most of them are free. All the waterfalls, geothermal areas and natural beauty are free and you don’t need to spend a cent. $0.
Of course, you could always shell out $50 for the Blue Lagoon, but it’s not necessary in my view. Try some of the more local thermal pools, some of which are free.
Be aware that all paid tours and activities are horrendously expensive. If you really want to do these, just be prepared to shell out a lot of money.
Total Cost of Travelling in Iceland
Car Hire – $11
Petrol – $9
Hostel – $20 or Camping – free
Food – $10
Total – $50 (or $30 if camping)
As you can see, it really is possible to travel to Iceland on a tight budget if you’re willing to sacrifice some creature comforts such as private rooms and pre-packaged or restaurant meals. The most surprising thing in my view is that hiring a car is such an economical option — more so than catching the bus. Check out the deals from Holiday Autos to see if you can get a car for $20 per day like I did.
Choose the right season
Choosing which season to go to Iceland in is so important to your budget. As with everywhere in the world, summer is the busy season as the whole of Europe is on holiday. Just be aware that in summer all the cheap places are booked out well in advance and you will be left with expensive options only — in other words, you’ll need to camp to make the trip cheap.
In Winter, it’s a different story. Not only do you get to see the Northern Lights, you also get much cheaper accommodation and rental car prices.
One last tip. Make sure you pick up your rental car from the airport even if you plan to stay in Reykjavik for a night or two because you will save a fortune on the bus ticket to and from the airport which is akin to highway robbery.