Are you trying to travel to Iceland on a budget? I understand the pain. When I first traveled to Iceland, I was 22 years old, unemployed, and had less than $1,000 to my name. I was playing ZERO games when it came to spreading my money as thin as butter scraped over too much bread.

Iceland is widely known for being an expensive country. But it, in my opinion, is worth every single penny spent. That said – there are numerous ways to keep the costs down while traveling this magnificent country.

Here are the top 9 hacks I discovered for traveling Iceland on a budget.

1. Choose camping as your accommodation

Save on accommodation by opting to camp or rent a camper van. In all honesty, this is actually the best way to experience the country. Most travelers choose to camp, and you can meet a wide array of incredible people at the various campsites scattered along Highway 1. You can’t possibly beat falling asleep to the sound of roaring waterfalls, or crawling out of your tent in the morning to sprawling fjords.

Campsites cost between 1,500 and 3,000 Icelandic krona per day ($10-20 USD), and some even offer free showers or food. Wild camping (outside of designated sites) is currently prohibited in most areas of the country, so make sure you are up to date on Iceland’s camping regulations before pitching your tent. If you don’t, you could end up paying a hefty fine!

If you’re traveling Iceland on a budget, camping is the way to go.

2. Rent a car or camper van

A typical rental car in Iceland costs 3,000-5,500 Icelandic krona per day ($22-40 USD). Camper vans will typically be slightly higher in cost – closer to 10,000-20,000 Icelandic krona per day ($70-139 USD). You’ll want to opt for a car with 4×4 wheel drive so you can drive it into more remote areas of the island.

BONUS: if you drive stick-shift, you’re in luck! Manual drive cars rent for cheaper prices in Iceland than automatic vehicles.

Rent your car in advance!

We made a rookie mistake on this one. Because we were under 25 years old, AND we did not book our rental car in advance, we were forced to buy full coverage for our car insurance. And it wasn’t cheap! It ended up costing around $30USD extra per day. This is easily avoided by reserving a rental and checking insurance policies well in advance.

Side Note: We were only able to rent a 2X4, and drove it around the country as though it were a 4X4. This overconfidence is another thing I do NOT recommend. We almost got stuck on a mountain.

3. Optimize your fuel…

Don’t forget to budget for gas! Iceland has one of the most expensive costs of gasoline in the entire world, which makes sense given its remote location. Currently, gas prices are around $2USD per liter, or roughly $8.50 USD per gallon. And keep in mind that you’ll be driving a lot – so be sure to factor that in.

Gas is expensive. It is also, unfortunately, a sunk cost. If you opt to rent a car or camper van (which is probably the best option if you want to really see the country), then I suggest traveling the island in a circle around Highway 1 so you avoid backtracking.

Despite the high fuel costs, driving and staying at campsites is still the most effective way to travel Iceland on a budget.

Warning!! Make sure you fill up at a quarter tank! Gas stations are hard to find, especially if you journey off of Highway 1 to check out some of the backroads. There is a lot of milage between towns, so make sure you plan accordingly!

4. …Or hitch-hike

Disclaimer— We did not hitchhike at any point on our journey, so I cannot speak from personal experience on this one. Take this tip with a grain of salt, and always make sure to exercise caution! While we did not hitchhike in Iceland, we ran into many, many people who were hitchhiking around the island. This is particularly common with visitors traveling from one destination on the Ring Road (Highway 1) to the other – but is significantly less popular on backroads.

Most of these hitchhikers are also just trying to travel Iceland on a budget. With that said, it might be more difficult to explore some of the “hidden gems” of the country. Hitchhiking is a cheap way to travel Iceland and meet locals, but you certainly have less say over your itinerary.

If you are hitchhiking, be sure to carry a tent and supplies with you at all times, and exercise CAUTION.

Side story: While we, ourselves, did not hitchhike in Iceland, we actually picked up a hitchhiker for a brief amount of time to go Northern Lights hunting. She was amazing. As mentioned before: if you are picking up a hitchhiker, always exercise extreme caution.   

5. Avoid eating out

If you are truly ballin’ on a budget, then avoiding restaurants is unfortunately a great way to save money (which is a sad truth for any ‘foodies’ out there). Restaurants in Iceland are where the bills really start to rack up – costing upwards of $50 USD for Kentucky Fried Chicken. That said, budgeting for one meal out per day probably won’t create too much of a dent in the wallet. But THREE meals per day?! The wallet would be cryin’.

Cook your meals, when possible

Most campsites in Iceland come equipped with lovely, full kitchens for guests to cook meals. And if you are renting a camper van, you’ll have a kitchen tagging along with you wherever you will go. It is much, much cheaper to purchase groceries in the supermarkets and cook meals than it is to eat out.

My friend and I did not eat in a single restaurant during our time in Iceland. Instead, we opted to cook all of our food on our camping stove. While we missed out on the local cuisine, we really did save a lot of money.

Of course, we couldn’t kick our coffee addiction, so we did end up paying 3,000 krona ($20 USD) total throughout the trip for cappuccinos.

Buy your food at Kronan Super Market

Buy your food at the Krónan – an Icelandic supermarket chain. There are 23 locations around the island, so you are guaranteed to encounter them as you travel. I found this store to be the most reasonable in terms of prices. To be honest, we were actually slightly peeved when we found this out (Seeing as we lugged a duffle bag full of food from Dublin to Reykjavik… read that disastrous, but hilarious story here).

BONUS: I recommend trying the Skyr Rice Pudding. It is cinnamon sugar rice pudding, and it is utterly to die for— you can get them at most gas stations and grocery stores, including Krónan.

6. Search campsites for useful items

This is the BEST pro tip: scourge your campsites for food and other useful items. Lots of travelers leave behind gear and food they no longer need at campsites. On the first night of trip, we scored a French press, a bag of dark roast coffee, three packages of powdered asparagus soup (which helped us create an incredible pasta dish), and an entire bag of Nesquik hot chocolate mix that lasted us our entire trip. Perfect for stargazing in sleeping bags with a steaming mug of hot chocolate.

Definitely take a look on the shelves in the campsite kitchens, and you may score some sweet deals! Just remember to give back as your trip comes to a close.

7. Skip overcrowded tourist destinations

Skip the Blue Lagoon.

I can hear the gasps from here. While the Blue Lagoon is a beautiful destination, it is packed and very overpriced. If you have money to spend, the Blue Lagoon is a great option. But if you’re trying to explore the country for cheap, there are alternatives. Numerous other hot springs are scattered across the country— many of which are frequented by locals and are free (plus a small donation to upkeep the springs). My recommendation: ask around about the hot springs in the area, and you will definitely find some hidden gems!

Pro Tip: When you stop off for a coffee break, refueling, or snack, ask the owner what they recommend checking out. By chatting with the locals we met, we found two hidden hot springs, an AMAZING Viking ruin, and a beautiful secret fjord.

8. Bring a re-usable water bottle

Bring a re-usable water bottle with you! If you are paying for water here, you are pretty much throwing your money out the window of your rental car. The island is full of crystal clear glacier water— I recommend it! We snorkeled in Silfra – the continental divide – which was full of the cleanest and clearest water I have ever seen. Definitely beat Evian and Perrier!

9. Build your own Northern Lights tour

Northern Lights tours are popular among tourists traveling to Iceland. But even if you sign up for a Northern Lights tour, there is no guarantee that you will actually see them. The company cannot PROVIDE the lights – they just sort of… happen. While tours give you a greater probability of seeing them, you can actually do a lot of the solar flare monitoring yourself.

Visit these websites for updates on the radar: Aurora Forecast, Northern Lights Forecast. When reading the forecast, search for areas around the island with minimal cloud coverage and a high probability for the Aurora, and set out for those destinations. This is a great way to see Iceland on a budget. Of course, the Northern Lights are difficult to track, but if you head to Iceland between October and March, you have a high likelihood of catching them at least once! Many locals know how to read the radar as well, so when you pop in to grab a coffee, you might as well ask around.

That’s all, folks!

Those are my top 9 tips for traveling Iceland on a budget! It is certainly doable, and no doubt a worthwhile experience. With the right pre-planning and attitude, you can absolutely see all this country has to offer without breaking the bank!

Have you been to Iceland? What are your recommendations for ways to save?

Check out my Iceland travel guide here.