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How to Travel Iceland On A Budget – 8 Top Tips in 2023

Wondering if its possible to travel Iceland on a budget? Find out how I traveled Iceland’s Ring Road on less than $50USD per day

Can you travel Iceland on a budget?  A quick google search of Iceland will yield thousands of images of amazing waterfalls, glaciers, mountains, volcanoes, hot springs and glacial rivers. Every scene truly is like a movie.

But, isn’t Iceland expensive? Isn’t it hard to get to?

Keep reading below for a first-hand account of how to travel around Iceland relatively cheaply without compromising on experience and adventure. We drove the Ring Road in the middle of winter, whilst sticking to a backpacker’s budget of $50 USD per day for all expenses.

Skogafoss waterfall in southern iceland, close to the golden circle
Olly gaspar

By Olly Gaspar, full-time traveler & adventure photographer for 6 years with 700+ published travel guides. I visit every place I write about & share real tips from what I learn.

Top Tips For Travelling Iceland on a Budget

Iceland is truly an adventurer's dream destination. If you were to ask most people what was on their bucket list, seeing the Northern Lights would have to be one of the most common responses. Thanks to TV series like Game of Thrones, Iceland is becoming more and more popular as a travel destination and it's easy to see why.

However, the tourism drive also makes it harder to travel to Iceland on a low budget.

Iceland on a budget ring roand landscapes

1. Rent a Car - Easist Way to Travel Iceland on a Budget

The easiest and best way to get around Iceland is to rent a car. Having your own means of transport will allow you to see more, as well as being able to move and explore at your own pace.

However, as anyone who has visited Iceland in the peak season knows, securing a rental can almost be impossible. That's why I recommend comparing prices across dealerships well in advance using tools like DiscoverCars.

Iceland on a budget road at sunset

The best and most common route for a holistic Iceland experience is to travel the Ring Road. This is Iceland's main Highway and loops around the entire Island. Don't worry, there are thousands of detours, hikes, and dirt roads to veer off from once you are driving.

Therefore, looping the Island on the Ring Road as a primary rough plan is definitely your best bet.


Related: Where to Stay in Reykjavik


2. Book Shared Bus Tours from Reykjavik

If you'd prefer not to rent a car, then there are plenty of short bus trips in Iceland that you can book very cheaply from Reykjavik, many for less than 70 euros per day.

Golden circle full-day tour with kerid crater

Golden Circle Tour

To see the best of Iceland's southwest sights cost-effectively, book a Golden Circle tour from Reykjavik.

Buses depart Reykjavik daily & visit top natural highlights like the Geysir area, Gullfoss waterfall, & Þingvellir National Park. However, this is one of the most popular tours in Iceland. So, book in advance to avoid missing out.

River in iceland on a budget
Waterfall in iceland

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3. Sleep in the Car

It Sounds cold? Yep, -18°C cold. But if you're a backpacker scrounging the last few hundred bucks left over from your Europe trip, then this is one way to really see Iceland on the cheap. This is how I traveled Iceland on my first visit back in 2015, spending less than $USD 50 per day.

It isn't glamorous, but there are countless perks of sleeping in a car in Iceland including:

  1. No wasted money on accommodation
  2. Sleep wherever you want
  3. Explore on your own time
  4. No packing and unpacking
  5. It's an adventure!

We had absolutely no issues parking our car either in small towns or in one of the many roadside truck rest stops. As an alternative, if you have the equipment or if you are planning an Iceland trip in Summer, you could always bring a tent and sleeping bag.

Remember to pack warm clothes and a thick sleeping bag. 

Although you will lack a warm shower, Iceland has no shortage of either commercial or small, local hot springs, saunas, and pools. These are very cheap and should also very much be a part of any Icelandic itinerary.

Seeing the Northern lights from a warm hot spring on the edge of a fjord is also one of the most romantic moments of my life. Unfortunately, the moment was shared with my hairy, bearded friend - and neither of us had showered for days.

Although it was an epic moment, his presence didn't do much to complement the amorous ambiance. 

Northern lights in iceland

4. Budget your food

This is a backpacking no-brainer. It's on every single "How to Travel X on a Budget" guide. Eating out really is the number one killer of cash on the road. You will have to prepare your taste buds for the humdrum of quick-to-cool oats and peanut butter if you want to travel to Iceland on a budget.  

1. Hostel freebies for cooking gear

If you stay in a hostel for your first night in Reykjavik, check out the freebies section. Many people drive the ring road and then fly out, often leaving their gas cookers, pots, pans, etc behind. Take advantage of this and grab some free cooking gear. B

Be sure to repay the favor on your way out.

2. Stock up on food in Reykjavik

There is no shortage of local supermarkets in Reykjavik. Make sure to stock up on essentials like oats, pasta, fresh produce, and road snacks here. This will be the cheapest and most plentiful source of food during your trip. Iceland is still quite remote, only 370,000 people live here and 130,000 of those are in Reykjavik!

3. Stick to the Basics

If you're reading this blog then you're more than likely looking for adventure over luxury travel experiences. To save money, stick to basic high-carb foods that are going to give you plenty of energy for your big hikes. Pastas, oats, muesli bars, and noodles are some of the cheapest foods but are some of the best for a road trip.

Besides, a hot $3 pasta and pasta sauce combo is probably going to taste just as good as an authentic Italian restaurant meal after a cold hike up a volcano!

Man walking through the snow in iceland on a budget

5. Enjoy Iceland's Nature

It really is simple. The best things in Iceland really are free. Chase the waterfalls, turn off for spontaneous day hikes, check out the glaciers, and drive out to the fjords at night to catch the Northern Lights.

These are the reasons you came to Iceland, and they shouldn't compromise your trip to Iceland on a budget.

Of course, there are some things that you might not want to miss that might lighten your pockets. Snowmobiling, glacier hiking, ice-caving, and helicopter flights.

Yes, these things are epic and definitely shouldn't be avoided. My general rule of thumb is to consider whether this is something I definitely can't do anywhere else in the world. If it is, I'd definitely go for it if you have a few dollars to burn. It really depends on your budget and expectations of Iceland.

Wild reindeer in iceland ring road

Read More: Best place to spot Wild Reindeer in Iceland.

6. Book Your Accommodation Well in Advance

Booking your accommodation in advance is always a smart move, especially when traveling to popular places like Iceland.

By booking in advance, you can secure your preferred location and avoid last-minute price hikes. I always compare hotels and budget hostels on Booking.com since they offer the largest selection of accommodations in Iceland. If you book often, a great way to save money is to take advantage of their great discounts on their Genius loyalty program.

7. Hitch-hike

Although hitching in Iceland is not so common during the winter months for obvious reasons, it has become a popular place to hitch during the warmer months. Of course, if you are heading in Summer as a solo traveller, it might be a great idea to hitchhike rather than rent your own car.

The best places to hitch a ride would definitely be at Reykjavik hostels, where many like-minded travelers begin their Ring Road journey, or just outside of town on Route 1.

If you're driving, picking up hitchhikers often pays off. There are hundreds of people looking to travel Iceland on a budget. This means that it's a great way to meet other travelers who may want to join in for the whole trip.

Although it's an unwritten law not to ask for money from hitchhikers, they may ask to join in on your whole Ring Road trip. This might be a good opportunity to share petrol and food costs if you have the space.

8. Visit in The Off Season (Winter)

While winters can be chilly in Iceland, visiting in the off-season is one of the best ways to save money on everything from accommodation to car rentals. However, there are many more reasons why visiting Iceland in winter can be a good idea:

  1. Northern Lights: One of the biggest draws to Iceland in winter is the chance to see the incredible Northern Lights. The Aurora Borealis is a natural phenomenon that creates a dazzling display of colorful lights in the night sky. Iceland's long winter nights provide the perfect backdrop for viewing this stunning spectacle.
  2. Winter activities: Iceland offers snowmobiling, ice caving, glacier hiking, or even the option take a dip in a natural hot spring in the snow.
  3. Fewer tourists: Iceland is a popular tourist destination, but during the winter months, there are fewer visitors. This means that you can enjoy all that Iceland has to offer without the crowds.
  4. Unique landscapes: Iceland's winter landscape is truly unique. The snow-covered mountains, frozen waterfalls, and icy fjords create a stunning winter wonderland that is unlike anywhere else in the world.

Travel Tip: It is definitely recommended to get a 4x4 vehicle, especially if you are planning your trip in winter. We got stuck a couple of times in thick snow and mud, a two-wheel drive just won't cut it.

Iceland on a budget glacier lake

You're in Iceland– Here Are Some Unmissable Experiences Worth Spending On

So, what are you going to do with all that saved money? The way I see it, travel budgets are well-spent on unique activities that you really can't experience anywhere else– it's hard to put a price on that! Hey, that's the reason we travel to start with right?

Here's a list of epic and unique experiences you can book in Iceland. For all you budget travelers– I've included some good bus budget options that often end up cheaper than if you were to rent a car yourself!

Photos to Inspire Your Budget Iceland Trip

Iceland is a landscape photographer's dream location. Towering mountains, daunting volcanoes, floating icebergs, and the famous Aurora Borealis. Hopefully, some of my shots will inspire you to visit this epic country.

Iceland on a budget seeing wild horses in iceland
Iceland on a budget house in the snow
Iceland on a budget guide thermo power
Img 1106

More Iceland Travel & Adventure Guides

I hope this short guide to traveling Iceland on a budget has been useful for your Icelandic travel planning! Before you head off, check out some of my other guides below for more inspiration and ideas.

Weseektravel pinterest pin for how to travel iceland on a budget
Thanks for Reading

I'm Olly Gaspar, adventure travel journalist & photographer. Traveling non-stop since 2018, I've published over 700 travel guides on We Seek Travel. These draw on my personal experience to share unique itineraries, accommodation tips, & fun adventure guides covering hikes, viewpoints, beaches, waterfalls, & tours. Read my Publishing Ethics Statement.

Your feedback & updates are crucial to keep my guides factual & current. Got new info or updates? Drop a comment below or contact me directly.

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