Iceland on a Budget

Watching the sun rise over a beach of black sand, or sitting in a valley and listening to the eery cracking as the glacier in front of you slowly moves and breaks off into the lagoon. Iceland has it all, from volcanoes, to hot springs and desolate landscapes. 

With that in mind, it is well known that Iceland is not the cheapest country in Europe, but not the most expensive of the Nordics (*ahem* Norway was the most expensive from my experience)!

Here are some typical costs for Iceland 2019:

  • B&B: 45€ per person night in a twin room
  • Bed in a dorm room in a Hostel: 30€ per night
  • 2 Bedroom rural cabin: 130€ per night
  • Restaurant meals: 15-25€ for a main course
  • Local beer in a restaurant: 10€
  • Local beer in a supermarket: 3-5€
  • Domestic flight: 50-100€
  • 5L bottle of water: get it from the tap – drinkable & free
  • Northern lights tour: 100€ with a guide or free independently 

Would you like to know how to travel Iceland cheaply? Here are some budget tips that I picked up to make Iceland affordable!

Jump to

Accomodation | Food & Drink

Transport | Activities

General Travel Tips for Norway

– Accomodation –

Stay for free: unlike Norway and Finland, there are restrictions where you can camp in Iceland. Inspired by Iceland state that

“Icelandic nature preservation law dictates where you are allowed to camp in Iceland if you find yourself away from registered campsites. In residential areas, you are allowed to pitch up to three camping tents in uncultivated land for one night only if there is no campsite in the area.

If you wish to camp on cultivated land or near residential buildings, fenced off farmland, or such, you have to ask permission from a landowner or other beneficiary before you pitch up the camping tent. The same rule applies if you intend to stay longer than one night. You are not allowed to camp on farmland without permission.

In the highlands, you have permission to pitch up camping tents. This applies only to a regular camping tent. Mobile campers must always seek permission from landowners or other beneficiaries before camping, whether in residential area, on uncultivated land or in the highlands. Further information”

If you are unsure, stay on a campsite. Although this is not free, it is significantly cheaper than a hotel. 

B&B or Hostels: this is a great way to sleep on a budget – especially in winter. There are however minimal options in remote areas of Iceland; therefore camping or self catering could be your only choice here. The only down side to a B&B or a hostel is that you have to find somewhere to eat, which can blow your budget, so self catering is a budget alternative.

Self catering: this is always the cheaper option and even more cost efficient when travelling in a group. There are limited numbers of self catering cabins in rural areas of Iceland, but it is a great option to enable you to explore in summer and winter on a budget (albeit, camping is the ultimate budget option here!).

– Food & Drink –

Food in a restaurant could set you back around 15€ for a pizza and 8-10€ for a beer. If you are staying in a remote location then your restaurant options will be limited, so self catering might be your only option. The food in a supermarket is more expensive than in central Europe, but there are ways that you can avoid those additional costs.

Tap Water

Bring a reusable water bottle and fill up – the tap water in Norway is drinkable and free!

Where to get food

  • Supermarkets: check if the supermarkets have a budget alternative as these can sometimes be half the cost of a regular brand. Some products don’t taste as nice in the budget alternative (like my experience with cheese), but if you’re on a budget then who cares!?
  • Bring your own food: if you have extra luggage allowance, then you could bring your own food. While I was on a trip to Norway in 2018, I had an extra hold bag and filled it with 20kg of cereal, dried beans, raw brownie bars, tins of sweetcorn and produce that would last longer like carrots and cauliflower, which upon arrival we turned to soup. We then used the supermarkets to buy fresh things like milk and cheese. Even if you have to pay 20€ for an additional bag, then it could be worth the savings. Or could you take less clothing and save space in your hold luggage?
  • Camping? Then you can bring your own camping foodie options which will automatically keep the costs down.

If you’re staying in a B&B or a hostel, you could always take a gas stove and rehydrate food sachets. Then pick up a gas canister when you land and then cook your food while out and about.

Half Board

Some hotels, especially in the cities such as Reykjavik and Akureyri  will offer half board. If you’re staying here, this can be the cheapest option – but shop around… it could be that another catering option is cheaper. Remember when ordering drinks that tap water is free! 


When you’re out and about, prepare your own lunch, drinks and a flask of tea (or coffee).

Iceland Budget

– Transport –

Rental Car

A rental car in Iceland will give you absolute freedom and the ability to see things for the cost of the rental and fuel.

We paid around 35€ per day for a Hyundai i30 and the same for a Chrysler SUV at Keflavik International Airport. If you take a northern lights chase tour, it will cost you around 100€ per person (including hot drinks, a thermal suit, biscuits and photos from the trip). We used our car through the day to see local areas and on an evening to see the northern lights. If you are looking to get out of your accommodation, then a rental car is a cost effective way to see Iceland.

Damage Waivers for Rental Vehicles

When renting a vehicle, there is always the possibility that it could be damaged or stolen. In this case, you’ll be liable to pay the damage excess. This is similar to the excess you’d pay on your own car insurance if your car is damaged or stolen. This can be anywhere from 200 – 1500€.

At the car rental desk, they’ll ask if you’d like to purchase a “damage waiver” insurance, which means you won’t be liable for the excess if the car is damaged or stolen.

Be aware that you can purchase this type of insurance online.

I paid around 50€ for an annual European Union policy. The car rental company wanted to charge me 14€ per day (140€ for the 10 day rental!). As you can see, it is worth taking out an external policy. I used Insurance 4 Car Hire, but shop around for the best deal.

I have had cases where a certain global rental company (while renting in Germany) tried to scare me into paying their whopping excess waiver by saying that I’d be liable for the entire cost of the car if it was damaged or stolen. This is not the case, they’d pay an excess to their insurer who would then replace or reimburse the amount for the car. Don’t be cornered by scare tactics.

If you refuse the car rental’s damage waiver, they will freeze an amount on your credit card, which could be the amount of the excess. This is unfrozen after the car is returned undamaged.

Iceland Air & Easy Jet

Believe it or not, getting to Iceland IS affordable. There are direct flights from major UK airports such as Manchester and Edinburgh. I flew from Manchester once with Iceland Air and once with Easy Jet for around 75€ per person one way including baggage. 

I admit that I searched through Skyscanner to find the cheapest site to book on. Be aware that some of the third party sites will try to tempt you to buy their add on’s such as travel insurance, which you can purchase for about one quarter of the cost elsewhere.

– Activities –

If you’d like free activities and to experience Iceland at its best, then head for the rural areas. There are some free attractions within the cities, but cities are generally more expensive. Nature is where it is at!


From sandy dessert roads, to snow capped mountains and glaciers tainted with black volcanic ash, Iceland has one of the most diverse landscapes in the world.

With your hire car, you can freely drive from glacier regions to watching the sun set on a black sandy beach (weather permitting) 


Iceland has some of the most scenic hikes in Europe. Some are easier than others and easy to navigate. Information online is limited in rural areas, but your accommodation will be able to point you in the direction of walking.

If you are unsure about walking outdoors, then opt for a walk where it is straight along a shore or up a hill, as opposed to across numerous peaks that could lead to potentially getting lost.

If you are not experienced, then take a guide. Additionally, in some snowy and icy areas, tours may only be possible with ski touring skis, crampons or snow shoes. With this is always a risk of avalanche and the requirement to carry and know how to use an ice axe to self arrest if you slip; consequently it is strongly advised to always go out with a professional guide. 


Is the blue lagoon on your bucket list? Regardless of the weather this is a great option. However, it is often very busy and not a great budget option. Standard entrance to the blue lagoon Iceland in 2018 starts from 50€ per person. This includes entrance, a towel, mud mask and a drink. 

Northern Lights

The northern lights can be done independently if you have your own way to travel or if you are staying in a rural area with no light pollution. If you are a beginner at hunting the northern lights, you can read more about chasing and photographing the northern lights here.

 – Independent Travel –

Sightseeing in Iceland can be done independently and free. This is a more flexible way to travel. We rented a car and used this to explore the surrounding areas and access trail heads.  Additionally, this is great if you want to see the northern lights independently!

– Buddy up –

Things are cheaper in bulk: renting a car, room, guide and cooking is cheaper when you do this with a group. So buddy up and help to avoid more costs by doing things alone.

– General Travel Tips for Iceland-

Transport to the cities

After each flight arrival at Keflavik airport, there is usually a Flybus outside of the international arrivals. There is a screen in the terminal that will say when the next flight will leave (or you can ask a the flybus desk).

The journey from Kerlavik airport to the city centre bus station usually takes around 45 minutes and costs around 40€ return.

If you would like to be dropped off directly at your hotel or designated bus stop, you can book the Flybus+. Once in Reykjavík, you will be transferred to a smaller bus and driven to your designated location. 

Tickets can be booked online at


In the cities and towns, there is an abundance of ATM’s. However, if you are travelling to rural areas, bring cash. Not every village will accept credit cards or have an ATM. The currency is Islandic Krona (ISK).

Wi-Fi connections

Wi-Fi and phone connections in Iceland are really great, they even have it on the Flybus! But if you’re heading to a rural area then expect to be disconnected for a little while. This is the best part!

If Wi-Fi is a must, then check with your accommodation prior to booking.

Bring a portable battery

There really is nothing worse than being out all day and then the photo opportunity of a lifetime appears, then you whip off the camera lens to find out you’re out of battery! Be prepared and bring a spare or portable charger.

If you really want an authentic Iceland experience, venture away from the typical tourist spots and backpacker meccas. Do your own northern lights trips, book a cabin in the middle of nowhere and watch the stars and northern lights from your hut.

It is recommended to use a guide for adventures that require specialist local knowledge such as ski touring, climbing and whale watching from a boat.

Is Iceland on your bucket list? I’d love to hear from you 🙂


2 thoughts on “Iceland on a Budget

    1. Sarah @touchingthesummit

      Thanks David – glad that you liked the post and photos. It is an amazing place – give me a shout if you need any pointers 🙂


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