How to Cut Costs in Iceland

Budget Iceland Tips

If you’re traveling here then you must be aware that it gets pricey FAST. One of the locals was kind enough to explain the situation to us; “We as Vikings have gotten lazy, we don’t go to other countries to rob them. Now we just wait for them to come here. ” The meaning behind this is simple, flights are cheap because everything else is so expensive once you arrive. But not to worry, we have found tips to stretch your dollar so you can enjoy more and spend less!

Packing Smart for Iceland

Take the time to ensure you pack appropriately, keeping in mind that if you forget something and have to buy it in Iceland, Its likely to be more expensive. For example, I ran out of mascara and thought “I’ll just grab some at the drugstore!”… $30 later I learned my lesson. So even if you want that extra bit of room in your backpack to bring home souvenirs be sure not to leave any of the essentials out.

How to Cut Costs in Iceland

Ensure you bring a water bottle as you can drink tap water in Iceland and shouldn’t be dipping into your hard-earned travel budget for $5 bottles of water every day.  Don’t forget to pack clothing for multiple climates such as rain, wind, and chilly temperatures. The weather in Iceland is very unpredictable and you don’t want to be stuck forking over hundreds of dollars for a warmer jacket or proper footwear. Check out this Ultimate Travel Packing Guide!

Vehicle Rentals

Thinking of taking local transport, Buses, or Trains in Iceland? Unless you are staying in Reykjavik the entire time you will probably end up needing to rent a vehicle. The rental companies will push their 4×4 vehicles stating as they have a much larger price tag attached to them but based on our experience they are unnecessary unless you are going to the highlands. We drove our Kia C’eed rental around Iceland for 16 days and had 0 issues.

Insurance is also something to consider carefully. The first step is to contact your credit card company and see if you have any coverage and what the coverage actually covers. Next look at what is offered by the rental company, our recommendations are to skip the theft insurance (this country is VERY safe), consider gravel road insurance as a rock chip can lead to a hefty bill, and last but not least the unique coverage of ash and ice, this is something to consider only in the winter months.

How to Cut Costs in Iceland
Vehicle Rentals in Iceland

Skip the Blue Lagoon

The blue lagoon is more of a 5 star spa then a lagoon. It has become a very commercialised business and the advertising was somewhat misleading. The most basic package is around $100 and the only real difference we could see was the option to spend additional money on face masks, massages and over priced drinks, which seemed a bit ludicrous when you are already forking over $100 just to get into the facility. With all this being said if you only have a short amount of time in Iceland or are just doing the Golden Circle trip, it’s probably going to be your best option in that region.

There are so many other options for soaking up that geothermal goodness, and the prices are WAY more realistic. There are nature baths littered throughout the country and plenty of natural hot springs in the west fjords as well (Many of them are free if you can figure out where they are).

Cheap Accommodation in Iceland?

The common perception of a hostel is that it is the cheaper alternative to a hotel stay. This is not always the case, hostels can run between $60-$300 USD whereas hotels are between $100-400 USD. So depending what area you are in the hostels could be the pricier of the two options, so be sure to investigate the areas you are heading to and comparison shop. Another point to consider is booking ahead of time as Iceland is insanely busy and books up quickly.

Diamond Beach

As for Couch surfing, we love it but not for Iceland as there are very few hosts that are able to accommodate, which makes sense with a population of 300,000 and about 6 million tourists a year. For our extreme budget backpackers your best bet (at least in the summer time) is camping as for the winter we suggest a camper van rental.

Select your tour Company Wisely

While you can travel the country independently, an unexpected cost can easily derail your budget and an unforeseen detour can mess up your itinerary in major ways. So we recommend taking the time to look into a tour company that suits your needs, wants, and budget.

We chose Iceland Unlimited because they met every request we threw at them. Their self-drive tours allowed us to travel independently enough that we fulfilled our adventurous nature, but we also had the backup of contacting the company if anything went wrong (luckily nothing did). Before we set off we had a detailed map, a car with GPS (and wifi If you can believe it), and a list of activities and pit stops along each day’s drive.

How to Cut Costs in Iceland
DC-31 Wreck Hike

Think Ahead for Drinks

If you like to drink during your travels, like most of us do, you will see pretty quickly that alcohol is VERY costly in Iceland. Our tips are to stock up at duty-free. Here are a list of options for what can be brought into Iceland from duty-free:

  1. 1L of spirits, 0.75L of wine and 3L of beer
  2. 3L of wine & 6L of beer
  3. 1L of Spirits & .9L of beer
  4. 5L of wine & 12L of beer
  5. Or 18L of beer

Another suggestion is to keep an eye out for happy hours at the local bars, 2 for 1 deals are very common and there are some very cool pubs in Reykjavik.

How to Cut Costs in Iceland
Iceland National Drink, Brennivin

Now an absolute necessity for us is coffee, and 2-3 cups a day adds up fast so take advantage of your hotel’s breakfast buffet and ask for a to-go cup. Also if your planning on taking any excursions check to see if they have complimentary coffee as well.

Food – Shop Don’t Stop

The average meal in Iceland is about $25 but if you head to the grocery store or a gas station and stock up, you can save A LOT of money. They offer a wide variety of local options as well as your classic western comforts. Our recommendations are the “Bonus” grocery store for the basics and the N1 gas station for quick fuel-ups for yourself and your car.

During our trip we also learned to embrace the Cronion sandwich, it’s a simple but elegant meal that kept us going in the more remote areas of Iceland (ingredients listed below).

How to Cut Costs in Iceland

Cronion Sandwhich

  • White Bread
  • Deli meat
  • Cheese
  • pylsusinnep (Sweet brown mustard from heaven)

Cronions (dried and fried onions of deliciousness)

Wool Save You Money (Get it)

If you’re looking for a cheaper alternative to the $150-$300 Icelandic sweater (Lopapeysa) try one of the many thrift stores in Reykjavik. We were surprised to see that these shops had a fairly good selection in great condition for about 40% less than the regular retail prices. If you do not want to buy used then be sure to shop around, we found the exact same sweater at multiple price points around the city.

Another Trick is to buy the wool itself, I found the savings weren’t worth the effort of crafting and designing an entire sweater and let’s face it, chances are it’s not going to look like it does in the store.  As for smaller projects, even a novice like myself managed to make some great scarves and mittens with minimal frustration. On average I spent about $7 per ball of yarn and It took a little less than 2 balls to create a scarf, which is significantly less expensive than buying a pre-made scarf in Iceland (closer to $80).

The Small Stuff

The small stuff

Here is a list of the smaller things that can help out your account balance:

– Take the Flybus instead of the $200 cab from the airport

– Try and avoid paying for parking, ask a local if there is a free area or cheaper area in the vicinity

– Pay close attention to the conversion, it’s easy to mix up

–  We picked up some brochures from a tourist shop and found a few coupons for free donuts, free coffee, and 2 for 1 meals

– There are a few discount cards out there (especially in Reykjavik) that will save you a bundle of museums and exhibits

How to Cut Costs in Iceland

After 18 days of traveling around Iceland we learned a lot about cost savings, the best tip we can give to you is, don’t stress. You can drive yourself batty trying to make sure you NEVER overspend, so remember it is a unique opportunity to able to visit Iceland and you don’t want to miss out on the great opportunities you are given. So have fun and be thrifty when you see the chance.

How to Cut Costs in Iceland

For all your Travel Iceland NeedsHow to Cut Costs in Iceland

Stephen Gollan

Uncharted Backpacker is a glimpse at the past eleven years of globetrotting I have done. Now at over ninety countries I share my travel knowledge for you so you too can travel the world and see what wonders it has to offer.

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