Iceland on a Budget: 10 Tips for Traveling Iceland on the Cheap

Updated: May 2025

Iceland is not a cheap country. In fact, it’s one of the most expensive countries I’ve been to, along with the Maldives, the USA, and the UAE. Yet I keep going back. I’ve been to Iceland in both the winter and summer months, and each time I did my best to adhere to a reasonable budget.

So, how can you travel to Iceland on a budget when everything is so expensive?

Here are a few tips to consider when visiting this Nordic island nation.

(Any prices listed are quoted in Canadian dollars).

READ MORE: Here is my total budget breakdown for travelling to Iceland in the winter of 2016.

1. Take Advantage of Iceland’s Grocery Stores
Paying for meals in restaurants is incredibly expensive. It can easily cost a party of two (with no drinks) at least $100 or more. Consider shopping at grocery stores to offset some of this expense.

Two of us ate three days’ worth of basic but healthy meals on groceries from the Bonus supermarket for $40. Breakfast and lunch are easy meals to make on your own. We typically purchase oatmeal, cereal, sandwiches, wraps, deli meat or canned meat, cheese, and fruit and veggies to cover the first two meals of the day. In the evening, we will occasionally treat ourselves to a meal out. If you opt for accommodations with access to a kitchen, you can cook in the evenings and easily prep and pack lunches to go.

To save on breakfasts, book a hotel that offers breakfast with your stay. European breakfasts are hearty and healthy with a variety of breads, meats, cheeses and some notable Icelandic dishes worth sampling.

READ MORE: Unusual Icelandic Cuisine: The Best and the Worst

Food Tip: One of the cheapest options for a quick, hot meal is the iconic Icelandic Hot Dog or Pylsur. It’s typically found in gas stations and is between five and ten dollars.

2. Limit Drinking Alcohol While in Iceland
Liquor can be pricey in Iceland. This is because liquor is highly taxed in the country. It’s only accessible in Iceland’s wine stores – called the Vínbúð – or directly from the brewer.

A top tip is to buy alcohol at a lower price before you leave the airport at Keflavik. Prices can be up to 30% less at the airport. So if you enjoy a beer or two in the evening, consider grabbing a six-pack or bottle of wine as you depart and enjoy it in your accommodation after your meal.

3. Travel in Iceland’s Slower Season: Winter
Travelling in winter isn’t for everyone. But if you’re interested in travelling to Iceland, consider going in their low(er) season. Winter travel offers a different perspective of the land of fire and ice. Even though daylight hours are short, you’ll have a better opportunity to see the northern lights. (They’re as spectacular as the photos look!) Plus, it’s golden hour nearly all day, so your photos will be beautiful.

READ MORE: 20 Photos to Inspire you to Visit Iceland in Winter

While you won’t be able to camp, accommodation is often cheaper than during the extremely busy summer months. Car rentals can also be as much as 40% cheaper in the colder months. You might even be able to bargain with a company if you’re booking a variety of tours or several nights with them.

4. Rent a Car. Even Better – Rent a Campervan in Iceland
Renting a car can be expensive, especially when you add the cost of fuel. But, if there are two or more of you travelling together, it will be cheaper than booking repeated day tours. A private driver is incredibly expensive, and most won’t travel too far from Reykjavik. A car rental allows you the freedom to go where you’d like and cuts the big fees of organized tours. While driving in another country may feel intimidating, Iceland’s Ring Road is easy to drive and traveller-friendly.

**Be aware that some activities and locations do require guides or specialty vehicles. These modified vehicles have larger tires and 4×4 to travel across F-Roads and reach remote destinations.

But even better than a car rental, consider booking a campervan in Iceland. Not only is this a bucket-list way to travel, but it combines a car rental and accommodation in one. Cozy Campers offers camper van rentals. And yes – they also offer sales of up to 30% off at certain times of year.

Cozy Campers has provided me with a 5% discount code if you book with them. Use THELOSTGIRLSGUIDE and book in here.

5. Stay in Hostels, Couchsurf, or use Airbnb in Iceland
I was shocked at the price tag of accommodation in Iceland. It starts at about $200 – $400 a night for a standard hotel room. Sleeping here isn’t cheap.

Other alternative options include using Airbnb, couchsurfing, or staying in hostels.

I’ve often stayed in hostels to cut my costs. You can still rent private rooms at a hostel. With a shared bathroom, the cost is often cheaper than a private hotel room with an ensuite. If you’re okay with sharing, a dorm room of 10 people is = $60 – $90 a night, per person.

6. Camp in Iceland
Another option to offset the cost of accommodation in Iceland, is to camp in the summer season. My partner and I flew over with a checked bag containing a tent, our sleeping bags, and cooking gear for camping. (We were also doing the Laugavegur hike).

We found camping was by far the cheapest – and arguably the best way – to enjoy the dramatic scenery of the country. Most campsites started at $50 a night and often had access to public toilets or showers.

Our favourite campsite was near Sælingsdalur in West Iceland. Just up the hill was the cute Guðrúnarlaug Hot Spring. We enjoyed it in the evening and early morning.

7. Use Coupons and Discount Codes in Iceland
When booking a car to travel around Iceland, I found a coupon for a car rental company that dropped the price of our 12-day rental by $300. There’s an app called Icelandic Coupons that offers discounts for a variety of restaurants and activities. Most discounts are 15 – 30% off and there are some 2-for-1 entrance fees.

8. Prioritize your Excursions in Iceland
There are a lot of cool things to do in Iceland. Doing them all would cost thousands of dollars. There’s also never enough time.

So, I made a list of things I wanted to do, ranked by importance. I focused on Iceland-specific activities that I couldn’t experience in other destinations. This helped me realize what could wait for another trip or a cheaper destination. Diving the Continental Divide was a must-do. Seeing orcas in the ocean didn’t rank as high, knowing I’d have an opportunity to see them at a later date in Patagonia and the west coast of Canada.

You can even consider skipping the famous Blue Lagoon in favour of other geothermal bath sites. There are many to choose from throughout the country, and some are even free, like Guðrúnarlaug Hot Spring.

When I first went to Iceland in 2016, the Blue Lagoon was only €40. Today, the cost has more than doubled and is now over €102 per person. Is it a neat experience? Yes. But you can visit so many other great geothermal bath sites for much less.

9. Take Advantage of Flight Deals and Consider Alternative Airports when flying to Iceland
We patiently waited to book our flights and ended up getting them for $140 less for two of us. Deciding to fly out of a neighbouring city a five-hour drive away in Canada also saved us $700 collectively. These savings also took into account fuel and long-term parking. Our return flight out of Edmonton was $497 each. When I returned to Iceland 8 years later, we chose to travel on certain dates and early in the summer season to take advantage of lower flight costs. It was worth the savings.

10. Take a Shorter Trip
A month in Iceland would be fantastic. Instead, I shortened my trip and travelled for 18 days to cut my costs while in the country. Although it’s nice to spend more time in any country, I had to be conscious of my budget. So I booked a trip according to what I could afford. I’d rather spend a little more each day on a shorter trip than feel money-stressed just because I chose to travel for more days.

How Cheap is Too Cheap when Travelling?

While I always advocate for being strategic and smart with your money, it’s not always worth pinching pennies if it’s something you really want to do or it causes you to stress out. A holiday is meant to be fun, so be willing and flexible to spend a little cash sometimes if looking for a particular experience.

Travelling Iceland on a Budget

While Iceland is an expensive country to travel to, there are many ways to offset the high cost and have a wonderful experience. While every tip in this article won’t work for everyone’s lifestyle, even putting one or two into practice can save you a surprising amount of money.

What are your best travel tips when travelling on a budget?