Iceland is a one-of-a-kind destination and is on the bucket list for many travelers. Unfortunately, Iceland is neither close to any other destination nor is it affordable. In fact, we were in complete shock when we walked into a local liquor store in Reykjavik and discovered a standard 750ml bottle of Smirnoff vodka was priced at nearly $60 US dollars! In Iceland, alcohol is disproportionally expensive compared to other travels costs but things like accommodation, transportation, food and tours can still be quite pricey.
On our recent trip we spent 5 days in Reykjavik for their popular Reykjavik Gay Pride and then embarked on a 2-day, self guided road trip of Southern Iceland. Not exactly sure where to start, we Tweeted our friend Inga at Tiny Iceland for time tips. With just two days to travel, she suggested taking a road trip south from Reykjavik to Vik. This journey presented us with some of the most amazing geological features we’ve ever seen! We highly recommend this route, especially if you’re short on time, since there’s a lot to see in just a short distance. If you have three days or more, it’s worth driving a bit farther east to the Glacier Lagoon, which has some of the most stunning sights in all of Iceland.
Unless you’re renting a car immediately upon arriving in Iceland, you’ll probably need an airport transfer to Reykjavik, some 45 minutes away from the Keflavik International Airport. Taxi’s are incredibly expensive but there are several companies that provide reliable transfers including Flybus, Airport Express and K*Express.
Both Flybus and Airport Express arrange their transfers to coincide with flight arrivals and departures so you won’t wait long upon arriving and you can pick a convenient time to return to the airport. K*Express is the least expensive option – about half the price of the others. But the kicker is that the transfer times are limited and only on set schedules. You can check their website to see if their scheduled times reasonably coincide with your flight times. In our case, we arrived too late at night to take advantage of this discounted service so we paid the 1,950 ISK (~$17) one-transfer with Flybus.
Transportation costs will be one of your bigger expenses on your Iceland trip but there are a few tricks to get the best rate. There are four basic options for exploring the southern region of Iceland.
We opted with the rental car because it gave us the most freedom at a reasonable cost. A guided tour will be the most expensive option, so it may not be best for doing do Iceland on a budget. However, some tours and day trips from Reykjavik of the Golden Circle are often worth the cost. Local buses are less expensive than renting a car but the schedules are a bit complex to navigate and you don’t have the freedom to explore anything more than the set routes. Hitchhiking is obviously the least expensive option but is probably the most inconvenient and not that desirable to most. Though to be honest, Iceland is probably one of the safest places in the world to hitchhike, which is clearly why we saw so many people doing it while driving in Iceland.
If you opt for the car rental, one way to lower your cost is to travel with a group. If you’re lucky enough to have friends or family traveling together, you can split the cost. Gas is expensive to American standards and just slightly above typical European standards. For the lowest price in car rentals, check out SADcars, which is a low cost rental company based in Reykjavik. They offer used cars for rental, so you might be cruising around in a car from the mid-90’s, but you’ll be saving a bundle compared to others in town. Sure, our car wasn’t luxurious, but it served the purpose and it was actually refreshing not worrying about causing minor scratches or damage. Since the cars are used, they only charge renters for major damage. They even offer pick up and drop off from either Reykjavik city or the airport. We took advantage of this option since we only needed the car for our last two days, then drove directly to the airport avoiding the expensive bus transfer to the Keflavik Airport.
We didn’t find any special accommodation deals in Iceland other than typical options like couchsurfing, hostels or apartment rentals. We did actually find a good deal through AirBnB in a great location, but we comprised on the space. Though it was a private room, it was in the attic and not especially convenient. Another option to consider in is camping in Iceland if you’re brave enough to fare the ever changing Icelandic weather. This is probably the least expensive option, though if you’re not traveling with a tent, it might not be ideal.
Iceland Attractions and Destinations
As luck has it, most of the national parks and destinations you’ll visit in Iceland are actually free. Some our favorite sites on the southern route are included below – all of which cost us nothing to visit beside our transportation.
- Seljalandsfoss waterfall: amazing!
- Skógafoss waterfall: even more amazing and one of the most stunning Iceland attractions!
- Seljavallalaug in Seljavellir: A natural geothermal pool, which is off the beaten path and one of South Iceland’s (not so) best kept secrets
- Dyrhólaey Nature Reserve: A Puffin breeding ground with hundreds of birds visible in the evening during the summer months.
- Reynis Beach in Vík: a black sand beach with amazing views
- Hálsanefshellir: another black sand beach with a sea cave and the famous Basalt Columns, which have been used symbolically throughout Iceland’s art and architecture.
- Hellisheidi: A river with hot springs near Hveragerdi, just 45 minutes from Reykjavik (Note: you must hike up a 45 minute route to reach the hot spings)
- Plenty of photographic opportunities with the Icelandic horses and sheep along the route
Food & Drink
The price of food and drink in Iceland is high and can add up quickly, especially if you’re eating out frequently. One of the least expensive, yet tasty foods we found during our visit was the traditional Icelandic hot dog – a must have meal for doing Iceland on a budget. In fact, Iceland’s hot dogs are famous and even former president Bill Clinton visited Baejarins Beztu Pylsur in Reykjavik, which is said to serve the best hot dogs in the world. We actually ate here once during our visit (though admittedly two hot dogs at once) and found it absolutely delicious. I’m not sure I’d go as far as describing it as “the best in the world” but it was definitely one of the best I’ve had. And considering I don’t generally care for hot dogs much, that’s a lot to say.
Another tip is to purchase food from the local grocery store to supplement your meals and reduce the amount you pay to eat out. The only catch is you need to be aware of prices even at the grocery store since many imported items are sold at a premium. It’s best to buy locally produced products which are less expensive but still high quality.
When it comes to drinking, there are very few options to stay on a budget. Of course, you can (God forbid!) stay sober the entire trip – but who wants to do that? The best money saving thing you can do is to buy alcohol from the duty free shop upon landing in the Keflavik Airport. You’ll save 50-75% on regular pricing otherwise found in the city. The only other option is to keep an eye out for happy hour specials. Many restaurants and bars, especially in Reykjavik, offer happy hour deals usually with reasonable specials on beer and wine.
One choice that will affect the cost of your trip is the time of year you decide to visit. The high season in Iceland is in the summer from June to August and prices for accommodations, transportation, sights and tours are accordingly higher during these months. A visit during shouldler season, like May or September will still afford you reasonable weather but with reduced prices. If you’re adventurous, you can visit during the winter in off season for a completely different experience, though still worthwhile given the opportunities to see the Northern Lights, beautiful winter landscapes and participate in outdoor winter activities.
The final advice we have if you want to save some cash is to completely skip the Blue Lagoon, one of the most popular Iceland attractions. Yes, it’s an incredibly unique, semi-natural feature but it’s also incredibly touristy and expensive costing 35€ to 40€, depending on the season. Our friend Matt over at Landlopers does a great job at explaining the low down on the Blue Lagoon. We decided to skip it on our trip and we don’t feel any regret!
Lastly, don’t forget to pack warm and waterproof clothing regardless of the time of year. Even in August when we visited, there were several times when we wore our warm jackets and were blasted with unexpected winds and rainstorms.
Have you been to Iceland? If so, what was your favorite activity? If not, what would you most like to see during a visit?
Note: SADcars provided us with our rental car during our trip but rest assured all opinions are my own.