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Iceland on a Budget

Have you always wanted to see the land of ice and fire? The island of contrasts and untamed nature? However, you’ve heard that Iceland is pricey, so you’re a little hesitant about going ahead with your plan. Don’t worry! We’ve done the research, and we’d like to show you how you can travel Iceland on a budget.

We’ll start by explaining why Iceland is so expensive, and maybe then you’ll come up with some ways to save money.

Why Is Iceland So Expensive?

First things first, let’s state a fact: Iceland is indeed very costly. According to the Numbeo database, it’s one of the top five most expensive countries in the world. But what’s the actual reason for this?

On one hand, Iceland’s remote location in the far north plays a significant role. The country’s economy relies heavily on fishing, and agriculture playing hardly any role at all. As a result, Icelanders must import a lot of products at a high cost, which drives up the final price enormously for globetrotters like us. In addition, stimulants like alcohol and tobacco are heavily taxed, making them more expensive than what you might be used to.

On the other hand, the insane hype around the island also contributes to the high prices. This is understandable because it has so many wonderful things to offer. But it doesn’t make it easier for lifeblood travelers. Just like everywhere else, demand determines supply. For example, this means admission fees to popular sightseeing spots skyrocket with the influx of visitors.

But don’t worry. Despite the large number of tourists, Iceland still has many quiet and beautiful places where you can simply appreciate nature and see some rare animal species.

No need to fret about the prices either! We’ll show you where and how to save money while still having a great, budget-friendly vacation.

When is the Cheapest Time to Visit Iceland?

Unfortunately, the cheapest time to travel to Iceland doesn’t correspond with the best time to visit. But that’s beside the point. The best time to go there is between June and August, when the weather is warmest and the days are longest. However, the costs are also highest: flights, accommodation, rental cars, admission fees, etc.

If you want to travel to Iceland on a budget, we recommend going during the off-season, which runs from September to May. This period may suit you even better, depending on the type of traveler you are. It’s much colder, and you’ll even get to see the world-famous Northern Lights all the way through April. This phenomenon alone indicates that it’s the low season. But there are other attractions to see, such as the Vatnajökull glacier ice caves. This amazing natural wonder is only seen in the winter because it melts during the summer.

Another advantage is that many admission prices are reduced, meaning you can save money and still visit incredible attractions like the Blue Lagoon.

But be careful. As great as cutting costs is, keep the following in mind – if you’re not a seasoned nature vacationer, we recommend the months of September, October, April, and May over the months in between. The cold, rainy, and windy weather can be quite intense from November to March, making the roads very rough and sometimes dangerous. Also, sudden changes in weather are not to be underestimated.

Flights and Rental Cars

When it comes to both flights and rental cars, the early bird gets the worm!

If you want to keep your travel and inland transportation costs low, don’t wait for a last-minute deal. It’s highly unlikely that you’ll get one, and the sooner your departure date, the more expensive airfares become. It’s sometimes better to look for early booking discounts. By the way, Tuesday, Wednesday, and Thursday are the cheapest flying days.

Keflavik, which is located next to Reykjavík, is the main international airport. Therefore, plan on having a rental car ready or continuing your trip by bus.

It’s best to book a car as early as possible when inexpensive options are still available. However, be careful – the cheap ones won’t always be useful. We strongly advise choosing a four-wheel-drive to avoid breaking down in the rugged terrain. Some roads are snowy and slippery, especially during the winter months, and most dirt roads are only accessible by 4×4 vehicles. If you’re caught there without one, you’ll have to pay a small fine. So for these reasons, it’s a good idea to invest in a suitable rental car right from the start.

In general, we recommend that you do your homework and compare airfare and rental car pricing to avoid overpaying.

Accommodation

Once you arrive, you’ll need a place to sleep, of course. But what’s best for a small budget? What’s cheaper than hotels and vacation apartments? Because the majority of your money is spent on accommodation, it can be a key factor in visiting Iceland on a budget.

If you want to save on accommodation, avoid hotels because you’ll literally lose a small fortune overnight.

Alternatively, we recommend renting private rooms or vacation apartments via special booking platforms. These are usually far less expensive than hotels, while still providing the same level of privacy and luxury.

Another option is couchsurfing, which is becoming increasingly popular. Through a platform, you can meet people willing to let you spend one or more nights on their couch. This option also gives you the advantage of immediately connecting with some Icelanders who can give you recommendations for attractions and excursions that are not as popular with tourists. Furthermore, they may have some insider knowledge of how to save money in their own country!

Food

Consider the following factor when it comes to food – local is cheap. This means that everything produced in and around Iceland is significantly cheaper. All things marine, such as seafood, are relatively inexpensive, while imported goods are substantially more costly.

Another tip for enjoying Iceland on a budget is to cook for yourself and shop in regular supermarkets, i.e., the same ones where locals shop. The prices are comparable to those around the world. Restaurants, on the other hand, are extremely expensive in Iceland due to high taxes. The good news is that the tap water quality is excellent, and it’s free with your meal in restaurants.

On the road, the rest stops offer food that’s tasty and cheap. Hot dogs are sold in different varieties, all of which are quite affordable, even for the more frugal. This is not surprising given that Icelandic hot dogs are often made of lamb rather than pork. By the way, Iceland has roughly 460,000 sheep, which is more than the country’s human population!

Excursions

Of course, your trip to Iceland shouldn’t suffer because of all these savings. There are numerous excursion possibilities that’ll make your trip memorable without breaking the bank.

First and foremost, as already mentioned, we recommend visiting during the off season because many entrance fees are discounted. If a thermal spa is on your Iceland bucket list, we suggest the free hot springs located all over the island, such as Reykjavík’s Nauthólsvík city beach.

Of course, self-guided trips into Iceland’s untamed wilderness are the best idea if you want to see Iceland on a budget. Simply ask locals for directions and, if necessary, allow them to guide you around. After all, Icelanders live there, so they are the most knowledgeable. They can give you some recommendations for what to visit and where to best see the native wildlife.

Conclusion

As you can see, visiting Iceland doesn’t have to be expensive. Even on a shoestring budget, you can have a terrific time here and discover the hot and cold contrasts of this intriguing island.

You now know the most important money-saving tips and tricks for your vacation. So let’s go! Now nothing will stop you from your dream trip to the land of volcanos and glaciers!

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