Planning a Trip to Iceland on a Budget: Things to Know Before you go

Last Updated on February 29, 2024

One of the things I say on my About Page is that I make mistakes so you don’t have to – and I actually made a big mistake in Iceland. Well, it wasn’t actually a mistake, because I knew I had to hit up one of the big grocery stores before leaving Reykjavik because big supermarkets are sparse on the island, and we wanted to pick up food to make picnic lunches during our road trip – restaurants in Iceland are pricey. And if you want to travel Iceland on a budget, you need to stock up on groceries. We knew this because I had researched Iceland budget tips before our trip, and so we went to the first Bonus supermarket we came across, ready to load up the car with groceries.

Only that the supermarket didn’t open until 11am (!), and we arrived there at 9am. So we decided to head off on the first leg of our road trip, assuming we’d be coming back through Reykjavik after driving the Golden Circle. But our assumption was wrong. We did NOT passed through Reykjavik again. Instead, we headed straight south. And were stuck with a small town grocery store in Vik, with a very limited selection. This mistake cost us a lot of money.I put together some other things I’ve learned on my road trip through Iceland to help save you money during your trip, to give you an idea what to expect in regards to how much things cost, my best Iceland budget tips, and last but not least – some thoughts on renting a car for your trip vs. using public transportation or hitchhiking.

Budget Travel Tips for Iceland

Don’t pay for water in Iceland

I was surprised when I read on other blogs that travelers had paid for water in Iceland. Icelanders pride themselves for having some of the best water in the world! It comes straight from a spring and it is delicious – why would you pay for bottled water?! Plus, you won’t contribute to plastic bottle garbage. Pack a reusable water bottle and fill it up every time you come across a tap in Iceland. This is one of the easiest budget tips for Iceland.

Shop at grocery stores and make picnic lunches

If you’re on a tight budget in Iceland, you won’t be able to afford much more than the famous Icelandic hot dogs, which are available at hot dog stands in most places for ISK350 – 380 (US$2.70-$3). Whenever we decided to eat out, we were shocked by the prices on the menus. Restaurants in Iceland sure aren’t cheap! A pizza would usually start at around ISK2,000 (US$15.50) a burger at around ISK1,900 (US$15), and a vegetarian pasta dish would cost around ISK2,200 (US$17)*.

*The exchange rate used is from February 2016.

To give you an idea what other things in Iceland cost:

Coffee is between ISK350 and 500 /US$2.70 – 3.80 (a little more for cappuccinos, lattes, etc).

Beer starts at ISK800 (up to 1200) /US$6.20-9.20, but if you buy a can in the supermarket, it will cost around ISK350 /US$2.70 (for 500ml). One of the best Iceland budget tips someone shared with me before I went to Iceland: If you’re renting a car at the airport, pick up beer in the Duty Free Shop. A six-pack of 500ml Viking beers is around ISK1,500 /US$11.55. This was a huge money saver for us!

Gas was ISK204/US$1.57 per liter when I visited in September 2015. That’s nearly US$6 per gallon!

2024 Update: Gas is now around US$2.32 per liter / US$8.78 per gallon.

The bus from the airport to the city center of Reykjavik is 1,950/US$15, cabs from the airport are around ISK12,000/US$92.

Activities are quite pricey: the Blue Lagoon starts at 7,000 (US$54), whale watching at 9,000 (US$70), a Golden Circle Tour ISK10,000 (US$77).

 

 

To get an idea what other groceries and entertainment in Iceland cost, check out this article on the cost of living in Iceland.

Note that there is a big difference between high season and low season prices for rental cars and accommodation!

The cheapest supermarkets to shop at in Iceland

Kronan, Bonus and Netto are the cheapest supermarket chains in Iceland.

Tipping in Iceland

Tipping is not customary in Iceland, so save your change!

Cash vs. credit cards in Iceland

I have to admit that I didn’t take out cash at all while I was in Iceland – I paid with my credit card everywhere! And not once was I unable to buy something because I didn’t have cash, cards were accepted in all the stores and restaurants I went to, even a small coffee shop in a tiny village along the way.

SIM card in Iceland

A SIM card with some data is useful if you want to look up directions or call a hotel/hostel or use a road map app, a weather app or the northern lights forecast website. The Duty Free Shop at the airport sells Siminn SIM cards, which have the best coverage in Iceland, with 1GB data, 100 minutes and 100 text messages for ISK2,990 (around US$23). A Vodafone SIM card can be bought at the same shop for half the price, ISK1,500 (US$11.85), containing 300MB data and ISK1,000 credit. If you don’t need any of these things, you’ll be totally fine with wi-fi, available in 95% of all guesthouses, I’d say, and also in most cafes, restaurants and gas stations.

Other Things to Consider when planning a trip to Iceland

Best time to visit Iceland

I would recommend visiting in the shoulder season – May or September. That way you can avoid the crowds that have flooded Iceland during the summer months in recent years since it has become such a popular destination, but you can still enjoy the activities that shut down in the winter months, like glacier boat tours, paragliding, snorkeling/diving in Silfra, or whale watching tours.

Also remember that if you visit in the winter, you have considerably less hours of daylight than in the summer, which makes a big difference when mapping out a driving route. It is also cheaper to visit Iceland outside of high season, so this is something to consider if you want to visit Iceland on a budget.

The Weather in Iceland

I thought I knew crazy weather from living in Britain but Icelandic weather easily tops that. We often woke up to rain and cloudy skies, and a couple of hours later the sun was shining. Or I would start driving in the morning with blue skies and then drove straight into rain. If you wake up to rain, don’t be fooled and think you should stay in – I guarantee you that the weather changes several times during the day. Vedur.is is the best weather resource for Iceland.

How to get around Iceland on a budget

Road trip vs. Public transportation vs. Hitchhiking

Self-guided vs. guided

As soon as we hit the road and saw tour buses by the dozen, I knew we had made the right decision going with an Iceland self-guided tour – it gave us the exact amount of flexibility and independence that we needed, and yet it was comforting to know that we didn’t need to take care of our accommodation. The places we slept at were all vouched for and in a strategic location for each day’s route, but I could decide how to plan the route, how much time to spend in each place, if we wanted to stop in other places along the way, or if we wanted to skip some of the suggestions in the itinerary. I didn’t need to follow each day’s schedule to a tee, which was great.

And I was more than happy to have the flexibility to spend as much time as I wanted in places like the magnificent Jokulsarlon Glacier Lagoon, instead of being herded back on the bus like most other tourists there. Or to decide to turn off and follow an unpaved road, only to find another glacier lagoon, Fjallsarlon, also stunning and well worth the little detour, which we couldn’t have taken had we been on an organized group tour. If you are traveling alone, however, and you don’t want to drive, an organized tour is the most convenient option to see a lot of Iceland in little time.

Iceland by rental car

If you don’t mind mapping out your road trip route yourself and booking your accommodation, there are plenty of car rentals available at the international airport. One of the best Iceland budget tips I can share: compare rental prices online before your trip and book via a third-party aggregator such as Expedia or Carrentals.com. I also recommend booking your car early, since there is a limited number of rental cars on the island and there have been rental car shortages during high season in recent years.

I never felt uncomfortable driving in Iceland, but you might find the narrow mountain and coastal roads a little intimidating if you’re only used to driving multi-lane highways in the U.S. However, I wouldn’t trade in driving myself for anything else – it just gives you so much freedom. I shared some driving tips for Iceland here. If you don’t need the comfort of a hotel bed, you can also rent a camper van, by the way. My fellow travel blogger Matt explored Iceland in a Happy Camper and seemed to have enjoyed it.

Iceland by public transportation

Iceland doesn’t have a rail network, but there are buses that connect the major towns. However, the bus schedule is quite limited and it will only allow you to get from city to city instead of stopping at all the waterfalls, geysers and glaciers you want to see on a trip to Iceland. Keep in mind that the bus schedules are even more restricted during the off-season.

For bus schedules during the summer months (including prices), check out Iceland On Your Own, who also offer a passport that offers discounted travel in several regions of Iceland – a great deal if you plan to visit Iceland on a budget. Their detailed bus schedules can be found here. Instead of traveling Iceland by public bus, consider hitchhiking:

Hitchhiking in Iceland

Hitchhiking in Iceland is adventurous, but it’s much more common than in the U.S., for example, and we came across quite a few hitchhikers – and even picked some up along the way. For us it was a fun way to meet other travelers and hear their crazy stories (a couple we picked up was nearly blown over a cliff in their little tent on a stormy night).

It’s definitely doable to circle Iceland on the Ring Road by hitching, but be aware that in some remote parts, it can take a while until somebody picks you up (hours!) and as I said before, the weather changes rapidly, so you might be standing in the rain for a while in a country that is chilly year-round. Hitchhiking is one of the biggest money-savers in Iceland, so if you are adventurous, this is the No 1 budget tip for Iceland for you. If you’re thinking about hitchhiking in Iceland, check out the Hitchwiki for Iceland. Dawn shares her hitchhiking experience in detail here, check it out to get an idea of what to expect.

Ride sharing in Iceland

Ride sharing is a popular way of traveling in Europe. If you are the one with the car, you can post the ride you’re planning to take on a ride sharing website, including how many seats are available and how much you charge per person. It’s a great way to get some money for gas, and one of the lesser known budget tips for Iceland.

People in need of a ride can post the details of the ride they want to take on this website, and car owners who are heading that way can respond to your post. Another website that lets you post the rides you require or you offer is Carpoolworld Iceland.

Check out the highlights from my Iceland road trip here:

Icebergs, waterfalls, geysers & lava fields: Highlights from an Iceland road trip

 

PIN IT!