How to Travel Iceland on a Budget: 10 Tips to Save Money in One of the World’s Most Expensive Countries

Updated: May 2025

Let’s be real—Iceland is not cheap. Alongside places like the Maldives, the United States, and the UAE, it ranks as one of the most expensive destinations I’ve ever visited. And yet… I keep going back.

I’ve travelled to Iceland in both winter and summer, and each time I’ve managed to stick (mostly) to a reasonable travel budget. So the question is: how can you explore Iceland without breaking the bank?

Here are my top tips to travel Iceland on a budget—based on real experiences, practical hacks, and prices in Canadian dollars.

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

Travel Iceland on a Budget

Want to travel to Iceland on a budget?

Here are 10 practical tips to help you save money on food, travel, and accommodation.

1. Shop at Iceland’s Grocery Stores to Save on Food

Eating out in Iceland can get very expensive. A single meal for two—without alcohol—can easily hit $100 or more.

Instead, shop at Icelandic grocery stores like Bonus, Krónan, or Nettó. We managed to eat for three days on $40 in groceries for two people. Think simple and healthy meals: oatmeal, cereal, wraps, sandwiches, canned meats, cheese, and fruit.

Pro tip: Book accommodation with a kitchen to cook dinner and prep lunches. And look for hotels that include free breakfast—European-style breakfasts are hearty, with lots of bread, cheese, meat, and Icelandic specialties.

BUDGET TIP: Grab an iconic Icelandic hot dog (Pylsur) at a gas station—one of the cheapest hot meals in the country, usually $5–10.

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

2. Skip the Booze (or Buy It at the Airport)

Alcohol in Iceland is heavily taxed and only sold in government-run Vínbúð stores or directly from breweries.

Your best bet? Buy alcohol at the Keflavík Airport on arrival, where prices can be up to 30% cheaper than in town. If you enjoy a drink in the evening, stock up before heading out on your trip.

3. Travel to Iceland in the Off-Season (Winter)

While summer is beautiful, Iceland in winter is absolutely magical—and cheaper.

Accommodation, tours, and car rentals can be up to 40% less expensive in the winter months. You’ll also get fewer crowds, better deals, and a chance to see the northern lights. (And yes, the golden hour light is as dreamy as you’ve seen on Instagram.)

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 – or Better Yet, a Campervan in Iceland

Driving in Iceland gives you freedom and can be more affordable than booking day tours. If you’re travelling with a friend or partner, it’s cost-effective, especially if you split fuel costs.

Want to save even more? Rent a campervan! It combines your transport and accommodation in one. I love Cozy Campers, which often offers discounts up to 30%. Plus, they’ve shared a 5% discount code for my readers:

Use code THELOSTGIRLSGUIDE when booking with Cozy Campers.

Note: For certain adventures (like crossing Iceland’s F-Roads), you’ll need a 4×4 or a guided tour due to road conditions.

5. Sleep Cheap: Hostels, Airbnb & Couchsurfing

I was shocked at the price tag of accommodation in Iceland. Standard hotel rooms in Iceland often start around $200 – $400 per night – oof!

Instead, consider:

• Hostels – private rooms with shared baths are cheaper than hotels.
• Dorm rooms – shared rooms start around $60–$90 / night per person.
• Airbnb – great for groups or longer stays.
• Couchsurfing – free if you’re comfortable staying with locals.

6. Camp in Iceland (in Summer)

Camping is hands-down the cheapest way to stay in Iceland during the summer months. My partner and I flew over with a tent, sleeping bags, and our camping stove – and it made for some pretty special memories. (Granted, we were also hiking the Laugavegur Trek, so a tent was necessary).

Most campsites are around $50/night, and many have showers and toilets. Plus, you’ll be surrounded by Iceland’s stunning natural landscapes.

Favourite campsite: Near Sælingsdalur in West Iceland, with access to Guðrúnarlaug Hot Spring—a perfect way to start or end your day.

7. Use Coupons and Promo Codes for Iceland Travel

I once saved $300 on a 12-day car rental in Iceland just by using a promo code. Check out the Icelandic Coupons app, which offers deals on everything from restaurants to activities. Prices are often 15 – 30% off, and many 2-for-1 entries on some attractions.

8. Prioritize Your Iceland Excursions

You can’t do everything in Iceland – it’s just too expensive. So make a list of must-do experiences and prioritize what’s unique to the country.

For me, diving the Silfra Fissure was a must. But whale watching? I knew I’d get another chance in Patagonia or Canada.

Also, consider skipping the Blue Lagoon, which now costs €102 per person. While it’s a cool experience, there are many other geothermal baths across the country – some for a fraction of the price, and some (like Guðrúnarlaug) are even free.

Is the Blue Lagoon a neat experience? Yes. And if it’s on your bucket list, by all means, cross if off (I did!). But if budget matters, you can visit so many other great geothermal bath sites for much less.

9. Look for Flight Deals and Alternative Airports

We saved $700 by flying out of Edmonton instead of our home city of Saskatoon, even after factoring in gas and parking. I also saved $140 by choosing the right booking window and flexible dates.

Book early, stay flexible, and compare nearby airports to maximize your savings.

10. Take a Shorter Trip

Yes, a full month in Iceland would be amazing. But I chose to travel for 18 days instead. A shorter trip meant I could spend more each day without stressing over my total budget.

Travelling should be fun, not financially stressful. Don’t overextend your stay if it means worrying about money the whole time.

Bonus: Don’t Let Budgeting Ruin the Experience

While I love saving money, I’ve learned not to let budget restrictions ruin the trip. If there’s something you really want to do – do it. Travel is about joy, wonder, and the experiences, not pinching pennies until the fun is gone.

Travelling Iceland on a Budget Is Possible

Yes, Iceland is pricey. But with a bit of planning, a flexible mindset, and these tips, you can experience this incredible country without blowing your budget.

Even adopting one or two of these tips can lead to hundreds of dollars in savings.

What are your favourite budget travel hacks for Iceland—or anywhere in the world? Let me know in the comments!

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