Iceland has a reputation of being a very expensive trip destination. For most people, that’s 100% correct. For many different items around the country, things that we’re used to seeing for around US$10 at home can easily cost US$25 or even more. For example, a burger and a beer at my hostel was more than US$30. So, in a country where getting around and even eating is expensive, how can you do it on a budget?

I wanted to share the five things that helped me travel around Iceland on a budget. I visited Iceland in May, so I didn’t have too many cold days ☃️ or nights. I did, however, have tons of sunlight 😎. In total, I went for 10 days. I worked remotely for 3 days and drove around the Ring Road for the remainder of the trip. I saw most of the country and ate lots of car sandwiches.

1. Rental cars

A company called Rent-a-Wreck will give you the most affordable option for car rentals. You won’t get the newest car, but you will get a reliable car to get you around. I used Rent-a-Wreck for my seven-day trip around Iceland. I had a tiny (toy car) that was a 4x4. The 4x4 helped with getting up some steeper terrain and was beneficial during some bad weather.

Red 4x4 car from Rent a Wreck in Iceland

Splitting the cost of the car and gas could be really valuable. I actually did not do this. I traveled alone, but I did meet a guy from Canada who became my friend and travel buddy, and I traveled around with him. We had our own cars and decided to drive them around separately because we already had paid for them. In hindsight, we could have consumed used half as much gas and each paid half as much for gas if we had split a car, but it was really relaxing and rewarding to drive around an entire country by myself.

Taking a picture while driving in Iceland Taking a picture while driving in Iceland

2. Grocery stores & making your own food

Most hostels and guest houses have kitchens that you can use. If they don’t have a fridge, don’t worry, because Iceland is cold. Your car can act as a fridge. Well, at least that is what I did. Lunch was often a sandwich that I would make at a picnic spot. I made frequent trips to the grocery stores to get some veggies, pasta, ramen noodles, sandwich materials like bread and eggs. Meat and other random items were oddly expensive. I based my food shopping on what was affordable. The two or three meals that I ate at restaurants were almost the same cost of the week of food that I got at the grocery stores.

Carton of eggs in Iceland Picnic from grocery store food in Iceland

Double decker home made awesome super totally amazing sandwich

The main grocery chain is called Bonus. You’ll notice it because the logo is a pig. Bonus stores are also huge.

The Bonus Grocery Store Pig

Also, some hostels give you free breakfast. I usually ate enough calories until dinner time. Shhhhh, I snuck away a few eggs 🥚 🥚 🏃.

Breakfast at KEX hostel in Iceland Breakfast at KEX hostel in Iceland

3. Buying your own beer

If you spend a lot of money on beer, you can save a lot by buying it at the grocery stores instead of at the bars. You can drink beer at some of the hostels and at your guest house for sure. Or, you can not drink at all! That’s the best way to save money on beer 🍺.

Elephant beer can

4. Buddying up in a room

Hostels are the way to go if you want to share the cost of a room. When there aren’t any hostels available, you can try your luck with finding a (new or old) friend and splitting a guest house room. Depending on what you find, it may cut costs in half for that night.

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5. Look for free alternatives

Iceland has a lot of expensive tours and places that require paying to enter. The Blue Lagoon is on a lot of people’s “must-see” lists. I heard otherwise, that it’s not a natural hot spring and that it is crowded. It seemed very expensive for what it was. The friend with whom I was traveling was using Maps.me and was able to find a natural hot spring called Reykjadalur. There are also adventures like the Golden Circle tour that you can easily do yourself with your rental car!

Blue sky with the Icelandic flag Iceland geyser at the golden circle Sunset at Jökulsárlón in Iceland

Other money-saving ideas for Iceland

If you want to really save some money, you can try hitchhiking. I saw a lot of people doing it, and it’s acceptable there.

You can rent a camper and save money on accommodations. Your ride and gas will be more expensive, but you will be able to cook all of your own food, spend more time driving and being in nature and you’ll e able to avoid costs for hotels and guest houses.

A Hulk Hogan camper van in Iceland