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How to Travel Iceland On A Budget – Driving the Ring Road

How to Travel Iceland On A Budget – Driving the Ring Road

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 out of a movie. But, isn’t Iceland expensive? Isn’t it hard to get to?

Keep reading below for a first hand account into how to travel 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

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 Iceland on a budget.

So how do I travel Iceland on a budget?

Travelling Iceland on a Budget

There are many ways to get around Iceland on a budget. Read on to find out how I spent less than $50 a day.

iceland on a budget ring roand landscapes

Rent a Car

By far, 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.

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.

Check out my general Ring Road Itinerary below, including the popular Golden Circle, best waterfalls and glaciers, Southern Iceland, Northern Iceland, The Western Fjords and Northern Reykjavik. Note that there are just way too many hikes and stops that aren’t included. Trust me, you will be pulling over to chase trail heads and photo opportunities every few minutes. It’s all part of the spontaneous adventure. Iceland on a budget probably means more adventure, since you’ll be out looking for it.

I’d recommend using the below map as a rough guide and to explore the hidden gems for yourself. 

Avoid international car rental companies

There are plenty at the airport but you will save money if you get a cheap local bus from Reykjavik Airport into the city and stick to local car rental companies. The best and cheapest option is

This is a great local company that even allows locals to put their cars up for hire. How awesome is the sharing economy? You can snatch up a decent four-wheel drive for around $65 per day. Although this is quite cheap, this will definitely be your main cost, and if you are sharing with a buddy, it’s really not too bad. This guide is written with the intent that you won’t be travelling Iceland solo and therefore sharing will allow you to hit that $50 a day and drive Iceland on a budget. If you are travelling solo, read down below for some tips on saving money. 

It is definitely recommended to get a 4×4 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.

River in Iceland on a budget

Sleep in the Car

It Sounds cold? Yep, -18 ° C cold. Before you close the tab, consider it as an option. There are countless perks of sleeping in a car in Iceland and it’s the best way to truly see Iceland on a budget.

  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 in 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 ambience. 

Northern Lights in Iceland

Read More: Full Guide to Seeing the Northern Lights in Iceland

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 out if you want to travel 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. – Be sure to repay the favour 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 300, 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, 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


Stick to 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, 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.


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 to rent your own car. This is one of the cheapest ways to travel Iceland on a budget.

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 unwritten law to not ask 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.

Photos to Inspire Your 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 glacier lake
Iceland on a budget seeing wild horses in iceland
iceland on a budget house in the snow
Iceland on a budget guide thermo power


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