Introduction
Planning an Iceland budget travel trip can feel daunting, especially with the country’s reputation for high prices. But what if I told you that you don’t need to break the bank to experience the best Iceland has to offer? Whether you’re a first-time visitor to Reykjavik or a savvy traveler aiming for a low to mid-budget adventure, this guide is packed with budget-friendly tips that will help you enjoy Iceland’s natural wonders, unique culture, and must-see sights without overspending.
In this post, I’ll share how to experience Iceland’s breathtaking landscapes, iconic spots, and vibrant city life – all on a budget. From affordable accommodations and smart transport options to hidden gems and free activities, you’ll find practical ways to stretch your money while still seeing the very best of Reykjavik and beyond. I’ll walk you through easy ways to save on food and sightseeing, so you can focus on enjoying your adventure rather than stressing over costs.
I’ve also included a curated list of free and low-cost sights around Reykjavik, perfect for any itinerary, and a handy packing list with affordable options to keep you prepared and comfortable throughout your journey. So, if you’re ready to dive into Iceland without the high price tag, keep reading — you’re about to discover how to explore this incredible destination without compromising your budget.
Time Your Visit
The best time to visit Iceland to see the northern lights is October to March, and the 2024/25 season is expected to be spectacular due to a period of peak solar activity. We visited in early March, when it was cold but sunny, the roads were clear and we were lucky and saw the Aurora Borealis on all 3 nights of our stay. It also didn’t get dark as early as it does closer to the winter solstice.
If you want to watch whales, spot puffins or see the midnight sun, then you’ll need to visit in spring or summer months.
Iceland Budget Travel Tip
Avoid the school holidays if you can, and be flexible with dates and times to find the cheapest possible flights. You can search for flight dates by price on Skyscanner or Trip.
Also bear in mind, this is one trip you’re not going to be able to do with a free under-seat size bag, so check whether taking one larger checked-in suitcase might work out cheaper than taking multiple cabin-size suitcases.
Rent A Car
Renting a car and driving, if you’re able to, means you can save money on organised tours, can be more flexible in where you stay and you can visit the sights on your own schedule. When considering hire car companies, compare the price and reviews but also check where the desk or office is based and whether it’s opening hours work with your flight times (or in case of a delay). Also make sure you’ll receive a 4-wheel-drive. We used rentalcars and GetRentacar to find and book our vehicle with Budget and were really pleased with our car and the hire experience overall.
Driving in Iceland is fairly easy as the roads aren’t busy or complicated, especially outside of the city, and the yellow markers help keep you safe if visibility isn’t great. Just always stay tuned to and follow local weather and travel advice.
If you can’t hire a car, then Get Your Guide has some great tour options that you can join to see the best Iceland has to offer, like this top pick Golden Circle tour.
Iceland Budget Travel Tip
Choose the basic level of insurance the car hire company offers and buy a separate excess cover from a company like Eversure. This usually works out FAR cheaper, potentially saving you hundreds.
Just make sure you have an accepted credit card to hold the deposit on in the lead driver’s name. And always video around the car before and after your rental so you can prove you weren’t responsible for any new damage.
Stay Outside Of Reykjavik
We chose accommodation with a hot tub in the quiet countryside of Vogar, situated between the Keflavik airport and Reykjavik, and being away from the city light pollution meant we got a better view of the Aurora Borealis while being kept warm by the spa water, instead of paying to join an organised tour and go out and stand in the cold for hours. We also had a fantastic walk along a local beach to a lighthouse, and captured some stunning shots.
Here are some fantastic budget accommodation options:
The Arctic Wind Hotel in Vogar is perfectly located for darker skies and has shared kitchen access at a great price.
The Garður Apartments, situated north of Keflavik airport, are also a great budget option with a full private kitchen. The land looks north over the ocean for an improved chance of seeing the Aurora.
And the Ocean Break Cabins nearby also offer a hot tub for watching the northern lights in style and comfort, at a really reasonable price.
Iceland Budget Travel Tip
Having accommodation with a kitchen means you can also save money by using a supermarket and preparing your own meals. We shopped at Bonus (you can’t miss those giant pink pig signs!) to prepare packed lunches and also took drinking flasks of hot drinks or soups out with us. The accommodation and car hire costs were more expensive on paper, but we would have spent far more on eating out, transfers and organised tours otherwise.
Pack Warm Layers – Lots Of!
Pure wool jumpers and socks, thermal layers, a waterproof and windproof long coat, a hat AND ear muffs and a snood to cover your face are among the absolute must-have items for comfort in Iceland. And ski gloves with touchscreen finger pads, because if you remove your gloves to use your phone you will get wind burn – and it hurts! Read to the bottom of this blog post for handy packing list and links to great option budget buys.
Iceland Budget Travel Tip
Cheap fleece-lined leggings, like the ones in Primark, worn under winter trousers will keep you toasty. Pack some hand warmers to keep inside your pockets and warm your hands as well as keep your phone from getting too cold, as the sub zero temperature drains your battery faster. Also bring a couple of power banks for this reason.
Get To Know Your Phone Camera
You don’t need to buy or carry expensive, heavy photography equipment to capture stunning imagery of Iceland. But I’d highly recommend watching some tutorials on how to get the most out of your phone camera and edit your shots, before you travel, especially for those all important northern light photos. If you know beforehand what settings to use, you’ll be able to set up and capture the shot right when you need it, and won’t risk missing the perfect photo. There are tonnes of Instagram, TikTok and Youtube videos on phone photography. If you want to photograph the northern lights, I’d recommend taking a good, sturdy tripod that you can weigh down so the wind won’t budge it for sharper long-exposure shots, plus a Bluetooth shutter button.
Iceland Budget Travel Tip
A pair of headphones plugged in to your phone works just as well as a Bluetooth button if you don’t have one, just click the volume button to take the shot (or start the timer).
Track Weather & Aurora Activity
Track the weather and aurora activity – if you’re driving, it’s important to stay alert for any weather warnings or road closures announcements. You’ll also want to keep an eye on cloud cover at night to know if you might see the Aurora Borealis. There are apps and websites where you can check the expected levels of Aurora activity and be notified of alerts of sightings from other users nearby. This is so useful to know where to head, and when, for the best chance of a sighting.
Iceland Budget Travel Tip
My favourite apps and sites are auroraforecast and My Aurora Forecast, this is what the local tour guides use and both are completely free!
Book Lagoons In Advance
For popular visitor attractions like Sky Lagoon or Blue Lagoon, book directly and well in advance. These often become fully booked weeks ahead of time, especially if Blue Lagoon is forced to close due to volcanic activity nearby. We visited Sky Lagoon, which admits over 14s only, and it was a fantastic experience.
Iceland Budget Travel Tip
Sky Lagoon offers different price packages – we did the 7-step ritual, but the basic admission price is great value if you’re not bothered about spending a few minutes in a sauna and using the body scrub. Book your arrival time for an hour before sunset to enjoy the most spectacular view, and you may even get lucky and see the northern lights while you’re there.
Use a Fee-Free Debit Card & eSIM
Iceland doesn’t use Euros, it uses Icelandic Króna, but it’s unlikely you’ll need any physical cash. Whether it’s paying for drinks, souvenirs, admission or car parking, almost everywhere accepts payment by card or app.
Data coverage is fairly good around Reykjavik and the Golden Circle area, and if you need an eSIM to avoid data roaming charges then aloSIM offers various options at competitive prices – use discount code TRAVELNAT for money off at checkout.
Iceland Budget Travel Tip
Use a fee-free debit card, like Monzo, or if you don’t want to change bank then check out Curve, to ensure all your transactions are exchanged at the best rate and don’t incur any charges.
Free & Low Cost Things To See & Do In Reykjavik
Iceland is a country of natural beauty, and there is so much to see and do for free or at a small price. Here are some of my favourite Iceland budget travel sights in the Reykjavik area:
Hallgrímskirkja Church – Admire the stunning architecture and visit the observation tower for panoramic views (small fee for tower access)
Sun Voyager Sculpture – Iconic Viking ship sculpture by the waterfront, perfect for photos at sunset
Harpa Concert Hall – Visit this beautiful modern building with striking glass architecture (free entry to the lobby)
Perlan Museum (viewing deck) – Perlan’s 360° observation deck offers great views over Reykjavik (small entry fee)
Reykjavik City Pond (Tjörnin) – Feed the ducks or just enjoy a peaceful walk around the pond
National Gallery of Iceland – Offers free entry on Wednesdays, showcasing Icelandic and international art
Nauthólsvík Geothermal Beach – Relax on this local beach with a natural hot spring pool
Árbær Open Air Museum – Experience historic Icelandic houses and culture (often offers free days or discounts)
Klambratún Park – Ideal for a picnic or outdoor relaxation, often with art displays in nearby Kjarvalsstaðir Museum (small entry fee for museum)
Reykjavik Street Art – Wander around downtown and discover vibrant murals and unique art installations. You can hire Bolt scooters for a small fee and get around the sights more easily
Free & Low Cost Things To See & Do Near Reykjavik
And if you’ve hired a car, these free and low-cost sights are all within an hour’s drive of Reykjavik and well worth a visit on your Iceland budget travel tour:
Þingvellir National Park – Drive the Golden Circle and stop here to walk between two tectonic plates and explore the birthplace of Icelandic parliament (free entry, small charge for parking)
Reykjadalur Hot Springs – Hike through a scenic valley to soak in a natural hot river (free)
Kerid Crater – Visit this beautiful volcanic crater lake with turquoise waters (small entry fee)
Bruarfoss Waterfall – A short hike leads to stunning blue falls in a peaceful setting
Hvalfjörður Fjord – Take a scenic drive along this quiet fjord with hiking and picnic spots
Glymur Waterfall – Hike to Iceland’s second-tallest waterfall; the views are worth the moderate trek
Krysuvik Geothermal Area – Explore geothermal fields with bubbling mud pots and steaming vents (free)
Reykjanes Peninsula Lighthouse – Iceland’s oldest lighthouse and rugged coastal views make for a lovely trip
Hellisgerdi Lava Park – Visit this enchanting lava park in Hafnarfjörður, known as the “elf capital” of Iceland
Bridge Between Continents – Stand between the Eurasian and North American tectonic plates on this unique bridge (free). This one is close to the airport, so could be a great way to start or end your trip
Your Ultimate Iceland Budget Travel Packing List
Packing for your budget Iceland travels can seem overwhelming, but don’t worry, I’ve got you covered.
Here’s a list of the items I found vital or useful during my stay to stay comfortable, save money and make the most out of the trip:
- Windproof and waterproof long coat
- Pure wool jumper
- Wool socks (plus cotton ones to wear underneath)
- Base layer tops
- Base layer or fleece-lined leggings
- Waterproof padded trousers/salopettes
- Waterproof fleece lined snow boots
- Crampons
- Thick lined hat
- Ear muffs
- Sunglasses
- Padded ski gloves with touchscreen fingers
- Snood
- Hand warmers
- Power banks
- Hot and cold drinks flasks
- Sandwich bags for packed lunches
- Phone mount and USB or USB C cable for using Google Maps in the car
- Tripod (sturdy wind-proof one) and Bluetooth button/headphones
- Backpack
- Waterproof backpack cover
Iceland Budget Travel Tip
Wear your bulkiest layers for the flight to save room in your luggage (and cost!), you can always slip them off on board but you’ll definitely need them close by when you land! With fresh base layers, you can wear the same outer layers again anyway, and believe me, you won’t need that change of shoes!
You’re All Set!
Hopefully this post has given you some useful information and tips to help you plan the trip-of-a-lifetime and get the most out of an Iceland budget travel itinerary, without bankrupting yourself in the process.
If there’s anything I’ve missed, or any related posts you’d like to see, let me know!
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