In the last decade or so, Iceland has seen a massive explosion in the tourism industry, and the little island that was barely recognized is now one of the most popular destinations to visit. It’s easy to see why, as the country boasts massive glaciers, meadows that look like valleys on the moon, breathtaking waterfalls, jaw-dropping auroras, a welcoming and friendly population, unique food, excellent beer, ancient viking history, and so, so much more. It’s a paradise for photographers, historians, explorers, and foodies alike.

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The only downside to visiting Iceland is the cost. I spent five weeks there in the summer of 2016 and I cringe to think at the amount I spent. Even though the Icelandic Krona (ISK) is very weak compared to the US dollar (USD), the prices are astronomical.

For example, USD $1 is equal to ISK 105. A small cup of plain coffee is about ISK 370, or USD $3.50. I once paid $7 for a breakfast that consisted of a small cup of tea and a bagel. Those beautiful Icelandic wool sweaters that every advertisement claims is a “must have”? The inexpensive ones are upwards of USD $110.

Iceland is an amazing place to visit, but it’s crucial to be aware of how much you’re spending before you open your bank account and gasp at the cobwebs. I learned the hard way that I should have kept better eye on my spending, so here are some things I wish I had known beforehand, as well as a couple of tricks I learned along the way.

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Akureyri, spreading the love. 

Food and Drink

Downtown Reykjavik is rife with variety of food: along one block I walked by an Irish pub, an American eatery, a Parisian cafe, an Italian joint, and three traditional Icelandic restaurants. With a rumbling stomach, I looked at the menus, but as soon as I saw the prices I went off in search of cheaper fare.

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Half of the menu at Cafe Loki.

For reasons I don’t understand, Iceland is in love with hot dog stands. It’s nearly impossible to walk into any part of downtown without bumping into one, and for a couple of dollars, there’s a variety of styles to choose from, with any kind of toppings I could imagine. My personal favorite was a “French style” frank, topped with fried onions and barbecue sauce. Don’t judge me until you try it!

Noodle houses are also a budget-saver. A large bowl of noodles typically runs between $9 to $13 USD, and was always enough to keep me satiated for the rest of the day as I perused the city or went on a hike. There’s a smattering through Reykjavik, but I only saw one in Akureyri.

I went out to the traditional Icelandic restaurants a couple of times, and the food is definitely phenomenal – I had a rich soup that warmed from the inside out at Fish, and enjoyed moss-and-herbal tea at Cafe Loki. However, there’s no possible way I could afford to do that every day, so I stuck to hotdogs and noodles, with frequent stops into the snack shops that can be found on almost every block. 

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My decadent meal at Fish.

Any guide to Iceland will tell you this, but here it is again: don’t waste your money on bottled water. There’s no point in buying water when the tap water is some of the cleanest on the face of the planet. Just fill up your water bottle in the kitchenette before heading out for the day, and you’ll be good to go. I even dipped my canteen into a few streams and rivers with no problems or concerns about contamination. There’s a joke (that isn’t really a joke) that the farmers will drink out of the same streams as the sheep, because the water is so clean.
If you do decide to pick up a bottle of water, read the label carefully. Many shops only sell sparkling water, not plain. I ran into more than a few travelers who learned this the hard way, and were trying to pawn off their many bottles of fizzy water! 

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Yes, but why is the tea gone?

Reykjavik loves to party, and the entire city comes alive every weekend night. When there’s a major festival, like Gay Pride Day, downtown is kept busy until the next morning! Even during the week, most clubs and bars see a fair number of patrons. It’s tempting to go out and drink and party all the time, but constantly buying booze will empty a wallet faster than a chugging contest will empty a bottle of beer.

This is where happy hour comes in. Nearly everywhere has a happy hour special running during the early evening, and paying $4.50 for a pint instead of $9 makes all the difference in the world to a traveler on a budget. So even though I only went out and partied a couple of times during the few weeks I was in Iceland, I still was able to go out and enjoy a drink as I pleased, without worrying about draining my bank account.

 

Lodging

Lodging, really, is what killed my budget when I was in Iceland. I hopped from hostel to hostel, paying on average $35 per night for a dorm room, without realizing a much more cost-effective solution was at my fingertips. For the sake of this article, I’m going to exclude CouchSurfing and the like, in part because I didn’t use it, and also to focus on what I think is unique to Iceland.

Camping. Oh my god, camping would have saved me an astronomical amount of dough.

I had chosen to see Iceland during the summer, so while the rain was ever-present, the snow had retreated to only the highest of mountaintops. Campsites litter the country, cropping up in some of the most unexpected places, and in every town I passed through, there was a campsite within walking distance of the main street – including Reykjavik! (Okay, that was a 25 minute walk to downtown, but still, it was within reason.)
I had brought a sleeping bag and pad with me to save on laundry costs (because many hostels charged an extra fee to use their linens), so had I chosen, I could have rented or bought a tent from one of the many outdoor shops in Reykjavik, and spent an average of $10 per night, with the added bonus of having the tent all to myself.

I noticed a fair number of campgrounds were associated with nearby hostels. This arrangement provided campers with select amenities of the hostel, such as bathrooms, showers, and kitchenettes, but without the price tag of a bunk bed. In the more rural areas, like the campsite at the bottom of Dynjandifoss, a small bathroom was provided, but otherwise I was on my own.

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Waking up to this makes a lack of kitchenette so very worthwhile.

Camping is such a common way of staying in Iceland that even other backpackers I encountered laughed at me when I said I was staying in hostels. “Why not just camp?” they asked me, incredulously.

Why not, indeed.

Transportation

Renting a car was a tempting option for me to see the country at my leisure, and many travelers opt to do this for a few days at a time. But the cost per day, for just me, wasn’t worth the benefit of (a) learning to drive a manual, and (b) putzing around on my own. What many backpackers end up doing, and what I did myself a couple of times, is pair up in twos or threes, rent a car, and share the cost of the road trip. Not only does this cut down on the expense of the rental, but it also cuts down on fuel, and it’s a fun way to get to know new people.

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A road trip to through the Westfjords affords surreal views.

The city buses are an easy and affordable way to get around town. Even though I ended up walking almost everywhere, I did take the bus a few times, and found the system easy to navigate, despite the language barrier. If I ever became confused, all I had to do was ask a local which bus would take me where I needed to go, and most were more than happy to help out.

Bikes are wildly popular in Iceland, and nearly every hostel I found had a bike-rental option. If something isn’t within walking distance, it’s certainly within biking distance.

I didn’t ever get the chance to use them, but there are also a handful of small airports around Iceland, with surprisingly low airfare. The cost of a ticket to fly from Reykjavik to Akureyri was approximately the same (possibly even cheaper, I don’t remember) as the cost of a charter bus ticket.

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Hitchhiking? Hitchhiking.

This boggled my mind as an American, but hitchhiking is a very common form of travel in Europe, Iceland especially. Once I got over my fear of strangers (it turns out, stranger danger isn’t always conducive to easy traveling), I hitchhiked several times and met some wonderful locals who were nothing but concerned for my safety. The first people to pick me up were a middle-aged couple who had a daughter about my age.“We would never want our daughter to hitchhike alone, especially in America,” they told me. “Iceland would be the only place we wouldn’t worry about her.”
I hadn’t known this before, but hitchhiking is a popular mode of transportation among backpackers, and it’s easy to see why. It’s polite to chip in a few dollars for fuel, but otherwise it’s free travel, and it provides a unique opportunity to meet people, locals or otherwise.

Tours and Activities

Tours are the other huge drain on the wallet. Some activities, like glacier tours, horseback tours, and so forth, require a guide, and for those I would be willing to fork over some cash. What you don’t have to spend your money on are the scenic and hiking tours. 

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Gullfoss will forever be my favorite place.

The most common tour out of Reykjavik is the Golden Circle. It hits three geological wonders: Gullfoss, the 105 foot waterfall; Geysir, the geyser that erupts every ten to fifteen minutes; and Thingvellir, the cleft between the drifting tectonic plates and site of the ancient Icelandic parliament, Althing. These monuments are absolutely worth seeing, but if you’re watching your pennies, there’s no sense in splurging on a tour bus. Find some other interested travelers and rental car, and see it on your own terms. I ended up splitting the circle in two separate trips, and each time I spent less and was able to move more freely than if I had bought a ticket for a tour. 

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It’s not every day you find yourself between tectonic plates!

Hiking tours are the other unnecessary expense, especially for the confident hiker with a rental car. I took a guided hike of Glymurfoss, and while I had a great time with my little group, laughing along with our hilarious guide who had us in stitches, I looked back at the end and wondered why I had spent the money. It was an incredible hike, complete with a shallow river crossing at the top of the sheer cliffs as white sea birds soared around us. It was an easily accessible hike, and wasn’t a terribly difficult excursion, although there were a couple of challenging places, like using the cable drilled into the rocks to ascend from a ravine. The only thing I might have found daunting on my own would have been the river crossing, but the water was low and slow enough that I would have managed fine had I gone solo. I do not rue the experience I had, however, I feel that it wasn’t necessary to go with a guide, had I done a little research and preparation ahead of time. 

When I mention my time spent in Iceland, the most common question I get asked is, “Did you go to the Blue Lagoon?! It looks amazing!” I did not, because of the price tag attached to it. Nearly every other traveler I encountered had been, and I received mixed reviews. Some said it was absolutely worth it and they would have stayed all day if they could. Others said it pandered to the hordes of tourists and was devoid of authenticity. Since I didn’t go, I don’t have an opinion to share, but I will say I was perfectly happy paying a couple of dollars to swim in mostly-empty outdoor geothermic pools, like the one in Reykjanes.

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Horse tours require guides, trust me

 

I blew through too much cash during my time spent there, but I have every intention of returning, armed with a tighter budget and the knowledge I gained from my first time around on where to save my money. The little country is a rife with places to explore, foods to try, culture to glean, and mind-boggling sights to see, and even five weeks didn’t feel like enough time spent there. But next time, I know where to save my hard-earned money!