Iceland is a beautiful and remarkable country, but it's no secret that it can get very expensive, very fast. However, Iceland on a budget is possible and you don't have to give up your Iceland bucket list to make it happen.

After a recent venture around the ring road with a group of friends, I came home spending less than I expected. That's right, I stayed under budget in Iceland. Here's how it happened:

iceland on a budget - ring road


1. Tent it

How cold do you think Iceland is? The answer is "not as cold as you may think". Tenting is completely doable in the summer months and will save a traveler hundreds of dollars. Sleeping in a camper van is one of the most common (and awesome) ways to travel around the Ring Road, and although they are fun and convenient, it isn’t always the ideal for a budget traveler. A four-person van can cost between $500-$600/person for 7 days, compared to $180/person for a standard car. If you plan on camping, be sure to have a solid tent with stakes, as high winds are frequent in Iceland.


2. Pee outside (but don't leave scraps behind)

Places with high tourism will have bathrooms available at the cost of $2/person for a single use (they even have an employee manning the station to collect money). To me, that’s a bit ridiculous, especially considering you can drive down the road a mile and pee in a ditch for free. Outside of tourist locations, the only bathrooms are in gas stations, which aren’t exactly easy to find when your body decides it’s time to go. Truth is, if you’re traveling Iceland on a budget, you will have to pee outside. But don't be an ass and leave your sanitary mess behind. Pack it in pack it out. 


Iceland on a budget - collage


3. Pack light

Flying with a budget airline may mean outrageous baggage fees. If you’re traveling with someone else, try packing everything you need into a single checked bag and split the costs. In Iceland, no one cares if you haven’t changed your clothes for 3 days. Make the most of your carry-on luggage and fit as many articles of clothing possible. If you don’t mind being a little toasty, wear 5 layers onto the plane, and only pack camping gear and freeze-dried food in your checked bag. You'd be surprised how much of a travel budget disappears to hidden airline fees. 


4. Avoid the Blue Lagoon

Overpriced, overcrowded, and overrated. Like any hidden-gem that becomes a global wonder, the Blue Lagoon saw its fame as an opportunity to make bank. Current rates without a reservation are $80/person. The Myvatn Nature Baths are 1/4 the cost, provide better views, and offer student discounts. 


Iceland on a budget - ice cave


5. Buy groceries

A block of cheese can cost $13, so imagine what an entire meal out is worth. Iceland’s food is high quality and delicious, but that means it is extremely pricey. Eating out for every meal can easily add up to $60 (or more) a day. Bring a spare bag or two into the store if you have any; grocery stores typically charge $1 for every plastic bag you use (awesome idea, right?). Spend $60/person on cheap store items like fruits, bread, chips, and canned goods to save a nice bundle of cash. Do set aside one night to try a local dish, like fermented shark (gross), horse (gross), or lamb (delicious). 


6. Explore on your own

It’s no shock to hear guided tours can cost hundreds of dollars. To explore the Iceland ice caves, there is a one-year waiting list and a price tag of $200. Tour buses to explore Iceland’s “Golden Circle” can cost $100, which includes a bus ride to the location and a guided tour. Spend your time wisely by finding ways to explore on your own—for free—without being surrounded by dozens of other tourists. It’s no secret that Iceland’s beauty is no longer a secret, so tourism is skyrocketing along with their commercial companies.


Iceland on a budget - waterfalls


7. Research rental car options

Rental car rates are much higher in Iceland than in the United States and it’s easy to get scared off on your initial search for one. The first three websites may showcase a small compact car for $600/week or a 4X4 SUV at $1,200. Keep searching and it is possible to find a small compact car for $390-$450, even in peak summer months. If you don’t know how to drive a manual car, your rental rate will be more expensive. Automatic cars are less common in Iceland, and having to rent one can increase your rental cost by at least $50. Waiting until the last minute to rent a car is also a wallet killer. Rental car availability will be low if you try to book one a week before you depart, and the car that was previously $400 a week, could now be priced at $900.


8. Be flexible and find flight deals

There are some astonishing flight deals to Iceland that help you achieve your dreams of traveling Iceland on a budget, but they aren’t necessarily going to be on the days you want to fly. Be flexible with travel dates and it’s possible to find a round-trip flight for $400 with promotions from WOW airlines. Finding that flight deal was the only reason I ended up in Iceland, and I would go back again if I found another.


iceland on a budget


9. Use gas stations wisely

Gas stations around the country offer $2 hot dogs and $4 large ice cream sundaes that are as big as my head.  Those are certainly worth the price and can easily be made into a $6 unhealthy-but-delicious meal. When buying groceries, purchase a couple gallons of water to keep in the car, as drinking fountains in Iceland are rare (even in tourist zones). These gallons can be refilled for free at any gas station with a car washing station. The hoses provide purified water and will keep you from constantly buying expensive bottles of water.

10. Know the cost of wool

Wool souvenirs are iconic to Iceland, and everyone wants to come home with a fuzzy sweater. However, be careful about spending all your money in one place. Wool is expensive, and an authentic wool sweater costs anywhere from $80-$300. I managed to squeeze out of the store spending a mere $10 and saved myself from buyer’s remorse, thank goodness. The couple in front of me, however, may have gone a little overboard on their $600 bill.


iceland on a budget - plane


Below was my cost breakdown per person based on two people:

Flight $450 (including one checked bag)

Accommodation $30 (1 night AirBnB stay in Reykjavik)

Rental car $200

Groceries $45

One nice meal out $45

Gas $200

Nature Baths $18

Herbal alcohol to drink next to a glacier $12


Outdoor travel blog

Soulful adventurer. Probably lost. Definitely eating ice cream.

In her late-teens, Shalee drove out of her small hometown watching the sunset behind her along the two-lane highway. Her ventures began in Michigan, where she taught herself to travel on a budget. Today, Shalee shares her tips and stories to thousands of readers interested in adventure, budget, and outdoor travel. Learn more about her here.

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1 Comment

  1. John on August 10, 2017 at 9:45 AM

    Awesome advice, was just starting to research a trip out there and glad I read this first!

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