Iceland On a Budget. Is it Possible?

Glacier Lake in Iceland


 “Isn’t it really expensive?”

“I paid over £7 for one portion of chips!”

“It’s a once in a lifetime holiday. You can’t afford to do it twice!”

These are just a few of the comments I heard when I announced that I had booked a trip to Iceland.

People told me that Iceland is expensive – a holiday to be saved for and enjoyed only by those with plenty of excess cash. A quick internet search will tell you that a beer is £8 and a decent evening meal will set you back £30-50. All true. But they’re not the whole story and a once in a lifetime trip does not always have to break the bank. According to my post-trip sums, we spent a total of £1649. Not bad for eight days in one of the most notoriously expensive travel destinations I have ever visited.

For readers who are following my FI journey (and rolling their eyes right now) – this trip was planned and booked before I started my ‘big push’ towards financial independence. It was an extravagance and not something I’d do every year. If you’re saving hard for financial freedom and don’t want to splash out, Iceland might not be on top of your priority list.

Having said that, part of my FIRE plans involve actually getting out and experiencing some of the things I’ve been putting off – and travel is one of these. The freedom to work where and when I can has opened up opportunities to book holidays when the price is right.

Iceland Holiday on a Budget

Iceland is an amazing destination and the constantly changing scenery is incredible (and free). But is Iceland on a budget really realistic? Here is a detailed breakdown of what we spent on an eight day tour of the island. I’ve included prices in ISK and pounds (rounded to the nearest £) where I can.

Travellers: 2

Duration: 8 days

Season: Late April

Itinerary: 8 day road trip around Iceland (Road 1 and the Golden Circle)

  • Day 1 – (Tuesday) arrive and drive to Reykavik
  • Day 2 – Snæfellsnes Peninsula
  • Day 3 – long drive to Akureyri
  • Day 4 – Myvatn lake and Nature Baths, drive to Egilsstaðir
  • Day 5 – drive to Hofn
  • Day 6 – Skaftafell, glacier walk, drive to Vik
  • Day 7 – Abandoned aircraft, drive to Úlfljótsvatn
  • Day 8 – Golden circle, drive to Keflavik
  • Day 9 – (Wednesday) Fly home

This might not sound exciting – it’s mostly driving – but the views in Iceland are spectacular, and there was brand new scenery around every corner. Seriously, the landscape changed so much each day – it was like nothing I’ve ever seen before. For anyone planning similar, I’d recommend doubling the driving time you see on Google maps (or your sat nav) because just stopping for photos and short walks will eat up a lot of your day! We left each morning between 8-9am and arrived comfortably each evening at around 5-6pm.

Getting Around Iceland – Flights, Car Rental and Insurance

Flights (x2): £210

Car Hire: £245

Fuel: £163 (22973ISK)

Car hire in Iceland was trickier that I expected. We found basic car hire for around £120 but the insurance included with it was minimal. Icelandic car hire companies offer a very basic cover for damage, with a huge excess and many exclusions, and several add-on options which reduce the excess and add cover for sand/ash damage. These extras add up quickly.

After reading a few horror stories from tourists who’d spent thousands to cover damage to their hire vehicles, I got scared! So we opted to book through a third party which added their own cover to reduce the excess. The car served us well and we returned it without incident. Whether we would have had problems with a cheaper vehicle is hard to say – we avoided gravel roads where possible and the weather was great so perhaps this helped – but the extra cost gave me peace of mind during the week.

We booked a car with Geysir Car Rentals, through arguscarhire.com.

Iceland Car Rental Tips

Make sure you have a clear credit card with a decent limit. The hire company will reserve an amount on the card to be held against any damage. Ours was around 350000ISK or £2500.

Check carefully if you plan to stray far from the main tourist routes – some roads in Iceland are accessible only to four wheel drive vehicles. www.road.is is a great source of information about roads and weather conditions.

Eating and Sleeping 

Accommodation: £601

We stayed in double or twin rooms (not dormitories). Price was a definite factor when we booked these and I don’t think we did too badly: the cheapest night was £53 and the most expensive was £105. Most places exceeded our expectations – nothing fancy but comfortable beds, nice showers and great food, when it was included. I booked most of the accommodation through Booking.com and Tripadvisor.

Cheap Accommodation in Iceland

Other options for accommodation in Iceland include hostel dormitories, camping and camper vans.

Hostel dorms were out for us (we have a light sleeper and a snorer). Camping would be fun in the summer and would definitely be something I’d consider. But there is the cost of hiring camping gear or the hassle of taking your own to consider.

We considered a camper van but it wouldn’t have saved us much, if anything at all, over the accommodation we actually booked. And the comfort of a proper bed and shower after a log day on the road was lovely!

Food and drink: £142 (20200ISK) 

We did cheat a bit on this one. We knew we’d be driving all day so packed snacks for the car in our suitcases. Bags of mixed nuts, a large slab of chocolate, and packs of oatcakes lasted us all week and a few sachets of Ainsley Harriot’s dried risotto made a great meal when we had access to a kitchen.

Apart from one beer with a burger, we didn’t drink alcohol during the week. Icelandic tapwater filled our water bottles every morning so there was absolutely no need to buy drinks.

Most of our food was cold and eaten on the go but we did splash out for two hot meals and a portion of Icelandic fish and chips. This total seems low – so much so that I had to add it up again – but it’s exactly what we spent.

Top Tips for Cheap Eating in Iceland

Lunch in Iceland

Bonus supermarkets are cheap (for Iceland) but we got a lot of our food from smaller places. Most garages around Iceland stock a range of sandwiches and rolls. I loved these baguettes – they cost around 600-700ISK (£4-5) and made a great lunchtime meal. We also bought sliced cheese, olives, crisps and fruit.

Consider accommodation with cooking facilities and/or breakfast. The breakfasts we were served were amazing – buffet style with meats, cheeses, salad, bread, toast, spreads, cereals and fruit.

Iceland Attractions: The Secret Lagoon, Myvatn Nature Baths, and Glacier Hike

Tours and entrance fees: £288

Myvatn Nature Baths: 4200ISK/£30×2 = £60

Secret Lagoon: 2800ISK/£20×2 = £40

We skipped the Blue Lagoon (which would have cost us 6990ISK/£50 each) and split this amount between two lesser known pools. They were both incredible and apparently far less crowded than the more famous tourist hotspot.

A little research will show you that it’s possible to bathe in Iceland’s natural lakes and rivers for nothing. Unfortunately, the two we tried to access were unavailable to us: one was along a rough track we didn’t want to risk the car on, and the other was in an area which was temporarily closed to visitors.

Glacier hike: 10900ISK/£78×2 = £156

Parking/misc. entrance fees: 4500ISK/£32

Most parking was free and in easy reach of many breathtaking sights. We only really started seeing parking and entrance fees when we reached the most popular tourist spots in the south west region near Reykjavik. As I recall, we paid for parking twice (500ISK and 700ISK), a road toll for a tunnel £1000ISK), bought some postcards and stamps, and there might be another entrance fee of a few hundred ISK in this total.

Total cost: £1649

And that’s it. £1649 spent. I have no idea whether that is a good price for Iceland but we certainly managed to avoid some of the most expensive tourist traps. I’d love to hear other people’s experiences of Iceland on a budget.

2 Responses to “Iceland On a Budget. Is it Possible?”

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  1. Sounds fantastic! And pretty frugal for what you got to do.

    It’s definitely on my bucket list so will remember to refer to your post if/when we finally go 🙂

    Did you take the main pic? Amazing!

    Cheers

    • ThisTime says:

      Thank you! It was pretty amazing for what we spent – though I must admit the cost did surprise me a bit! The pictures are all mine.