How to travel Iceland on a budget in 2025
Iceland. World-renowned for its endless dramatic landscapes and magnificent natural beauty, it attracts travellers from across the globe. However, the part of its reputation which often precedes it is that – it’s damn expensive!
FEEEAAARRR NOT adventure seekers….we are here with tips and ideas to make your Icelandic adventure unforgettable without breaking the bank in 2024!
Travelling to Iceland
This is dependent on where you are coming in from, but due to its location, Iceland is incredibly well served from both the east and west, with direct flights from all over Europe and particularly the east coast of the US. Many budget airlines offer routes and there's always a deal to be found to make your Icelandic getaway possible.
Embrace Free Activities
Some of Iceland's crown jewels are absolutely free! Hike stunning glaciers, marvel at cascading waterfalls like Gullfoss and Skógafoss, witness the power of the Atlantic Ocean at Reynisfjara black sand beach, and be mesmerized by the Northern Lights (during winter). Amazing, life-long memories are provided free of charge by our own mother nature!
Explore cheaper, lesser-known alternatives
Geothermal Delights: Skip the pricier Blue Lagoon and head to Laugarvatn Fontana for a geothermal pool experience with a dose of Icelandic tradition. Exploring hot springs and geysers along the Golden Circle route. See our ultimate guide on the best geothermal spas Iceland has to offer.
Self-guided tours: organised tours of the famous Golden Circle can become expensive, and may include things you do not necessarily want to see or do. While they take the stress out of driving and undoubtedly offer some extra information and perspective from locals, if you’re looking to do Iceland on a budget, we’d recommend hiring a car and curating your own tour, with a little research and effort you can have the same great experience for a fraction of the cost. Read our how-to guide on creating your self-drive golden circle tour (coming soon!)
Accommodation on a Dime
Hostels and Guesthouses: if you plan on spending as much time exploring as possible, why pay for a fancy hotel room to sit empty most of the time you’re there! Ditch costly hotels for budget-friendly hostels and guesthouses. Many offer dorm rooms and shared kitchens, perfect for meeting fellow travellers and whipping up meals.
Airbnb: Icelanders have taken to Airbnb in a big way, and one report suggested as much as 10% of the apartments in Iceland were listed on the site! There’s everything from single rooms and basic apartments to ultra-luxury full house stays, many places offer 1 night stays, which make Airbnb a great option to curate a road trip, while staying in a fixed 4-walls!
Camping: truly embrace the great outdoors by pitching a tent at one of the many designated campsites across Iceland. Travelling in a motorhome can also be one way of combining the cost of travel and accommodation, Iceland is well set up to accommodate those who wish to travel in this way, with plenty of stops on the circular route 1. This allows for flexibility and the opportunity to fully immerse in the natural surroundings.
Foodie on a Budget
Supermarket Savvy: Skip expensive restaurants and stock up on groceries at Bonus or Kronan, Iceland's budget-friendly supermarkets. A reusable water bottle is a must – Iceland's tap water is delicious and amongst the best quality in the world.
Kerb side bites: Iceland is famous for its hot dogs - they're a cost-effective, tasty, and surprisingly filling option. Available from multiple street vendors in Reykjavik.
Street Food Markets: there are multiple options in Reykjavik, our preference was Hafnartorg Gallery - offering a range of casual dining options and flavours from across the world. Selfoss also has a charming street food market in the centre of town - the old dairy food hall - is a great way to round off the Golden Circle, and is on the way back from Seljalandsfoss towards Reykjavik.
Self-Catering: Utilize kitchens in hostels or guesthouses to prepare meals as well as packing some travel snacks to avoid impulse purchases.
Transportation Tips
Rent a Car (strategically): Explore car rental deals during off-peak seasons. While fuel prices can be high, there are some great deals on rental cars available in Iceland. The roads are a pleasure to drive on and renting a car offers maximum flexibility!
Buses for the Budget Conscious: Iceland has a decent bus network, especially for reaching popular destinations like the Golden Circle and South Coast. If this is going to be the way you explore the island we’d recommend purchasing a multi-day pass for cost savings.
Hitchhiking (safely): while not practical for more than the solo traveller - hitchhiking is a common and safe practice in Iceland. It's a great way to meet locals and save money, but always prioritize safety and use common sense.
Plan, plan, plan
Off-Season Adventures: shoulder seasons (spring and fall) offer a comfortable compromise between crowds and costs. Flights and accommodation are generally cheaper compared to peak summer.
Travel with Friends: sharing expenses with friends makes everything more affordable. Split the accommodation, car rentals, and groceries.
Book in Advance (sometimes): while some things are best booked on arrival (hostels, campsites), consider securing flights and car rentals well in advance, especially during peak seasons.
Bonus Tip: try to pack for all weather conditions! Iceland's climate can be unpredictable, and having the right gear can save you money on buying while you’re there, or replacing ruined clothes.
With some planning and these budget-friendly hacks, you can experience the magic of Iceland without burning a hole in your wallet. So, pack your bags, embrace the adventure, and get ready to be captivated by this magical land of Fire and Ice!