Backpacking Iceland: The ULTIMATE guide to Iceland on a budget

Traveling to Iceland on a budget is possible -- without sacrificing experiences.

Backpacking Iceland: Top Experiences


  1. Gazing at the magnificent Gullfoss Waterfall on the Golden Circle
  2. Walking behind Seljalandsfoss Waterfall at sunrise
  3. Seeing the Northern Lights
  4. Checking out Reykjavik’s hip arts scene and Viking history
  5. Relaxing in the geothermal spa at the Blue Lagoon


Jump to the list of posts from Iceland, or read on for my comprehensive Iceland travel guide.


Iceland itinerary ideas


A great Iceland backpacking itinerary can be as little as four days.
If you want to travel Iceland on a budget, try coming for just a long weekend — you can still pack in plenty of activities.


One reason Iceland is such a popular destination right now is you don’t need a very long Iceland itinerary to see the best the country has to offer. My four day Iceland itinerary takes in the Golden Circle and South Coast, while leaving time to explore Reykjavik and pamper yourself at the Blue Lagoon.


Have a bit more time? Consider the classic road trip covering the entire Ring Road. The minimum you’d need for this is about a week, and you’re better off going between April and October, before roads close for the winter. You could extend a Ring Road itinerary for another week and do more side trips as well.


If you have more time and are traveling in summer, the Highlands are a great diversion. Trekking is the name of the game here, and the Laugavegur Trail and Fimmvörðuháls Trail are the highlights. Options range from four to eight-plus day treks.


Iceland weather and when to visit Iceland


When planning a trip to Iceland, consider the season. Your Iceland trip cost will be far lower in winter.
The best time to visit Iceland on a budget is winter. It’s also a beautiful time to go, with low light lasting all day.


Believe it or not, despite its location near the Arctic Circle, Iceland is a year-round destination.


The weather in Iceland is relatively consistent throughout the year due to the jet stream. Summer highs are generally in the mid-50’s (Fahrenheit), although it can get closer to 70. Winter temperatures tend to hover around 35 degrees.


Wind, precipitation, and clouds are factors year-round, although they’re much less extreme in the summer. If you drive over mountain passes on the Ring Road you can experience all four seasons within a couple hours. No matter what time of year you visit, pack warm and waterproof clothing.


The biggest factor in deciding when to visit Iceland is daylight. During the “midnight sun” in July and August, you get nearly 24 hours of sunshine. This is great for long days on the road, but it brings large crowds as well. However, some of the best things to do in Iceland — like trekking in the Highlands, visiting the lava crater, puffin-spotting, and driving in much of the middle of the country — are only possible in summer.


Winter in Iceland is a totally different experience. The sun doesn’t come up until nearly 10 am and sets by 4 pm, but you get beautiful golden light all day long. Activities that you can do in winter include glacier hikes, visiting ice caves, and seeing the Northern Lights.


Spring and autumn are good compromise seasons, but they’re very short — spring lasts from late April to early June, while September is the only solidly autumn month. You’ll still have lots of daylight and mild temperatures, and fewer crowds than during the summer, but winter-only activities won’t be open yet. These are good times of year to keep your Iceland trip cost low.


Language in Iceland


You'll have little trouble using English to get around on your Iceland budget trip.
Language is not an issue when traveling to Iceland — nearly everyone speaks English.


The main language spoken in Iceland is Icelandic. It’s known for being an exceptionally difficult language to learn, with several more letters than English, many long words, and complex pronunciation. If you’re interested in giving it a try, check out this guide, which breaks down the different sounds.


If language learning isn’t your thing, don’t worry — most Icelandic people speak good English. Anyone who regularly works with tourists will probably speak better English than you do, without a thick accent. As soon as people identify you as a foreign tourist, they’ll revert immediately to English.


The one exception is the older generation doesn’t speak much English. I stayed at a guesthouse in Reykjavik owned by a retired couple and was unable to communicate with the man. The woman spoke very limited English, but enough to get through checking in and asking a couple questions.


Budget for backpacking Iceland


Backpacking through Iceland on a budget is difficult, but totally possible.
The ideal Iceland travel budget includes enough money for activities like chasing the Northern Lights.


There’s no way around it — backpacking Iceland is expensive, even compared with the rest of Europe. But if you’re careful, you can enjoy this stunning country without going completely broke.

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A bare-bones Iceland travel budget starts at around $100 USD a day. This will cover your accommodation, transportation (especially if you can share a rental car), and meals out of a supermarket. Solo travelers should plan on $150 a day to cover either tours/bus tickets or a rental car for just yourself. In July and August, these costs rise as much as 30%. If you want to stay in a private room and do a couple activities you’ll need at least $200 a day.


Sample costs


Dorm bed in a hostel: 2,500 krona

Meal at a Reykjavik cafe: 1,300 krona

Cup of coffee: 400 krona

Museum or national park admission: 1,600 krona

Car rental (Per day, not including petrol): 8,000 krona and up

Flybus from Keflavik Airport to downtown Reykjavik: 5,500 krona (round-trip)

Blue Lagoon admission (comfort package): 7,000 krona 


Iceland visa requirements


If you're from the U.S., you don't need a visa for your Iceland backpacking trip.
Most North Americans don’t need a visa when traveling to Iceland.


Most travelers from Europe, North America, and Australia do not need an Iceland visa to visit the country.


Iceland is part of the Schengen Agreement. Visitors from other Schengen countries don’t even need a passport to enter Iceland. If you’re from elsewhere, you will get an entrance stamp granting you a total of 90 days in the Schengen zone in any 180 day period.


Border formalities are extremely straightforward. You’ll probably arrive at Keflavik International Airport in Reykjavik. The customs lines are short. Agents will ask you how long you plan to spend on your Iceland backpacking trip and stamp you in without a hassle.


If you’re not from a country that offers visa-free entrance to the Schengen Zone, you’ll need to apply for a Schengen visa to go backpacking Iceland.


Accommodation in Iceland


Iceland accommodation is extremely expensive and books up far in advance, but you can still find good deals in off-season.
Iceland accommodation books up far in advance — reserve your rooms early, especially in summer.


Iceland has a huge range of accommodation for travelers at all budgets. However, visitor numbers still outpace the development of new places to stay, so you should always book well in advance. This is doubly true during the summer. Accommodation is likely to be the biggest part of your Iceland trip cost.


The most popular accommodation for people backpacking Iceland are campgrounds. You can stay in a tent or a campervan, and electricity is often available. Usually you can just turn up and grab a site. Prices start as low as 1,000 krona. Showers often cost extra and involve standing in long lines. Camping is, for the most part, off the table in the winter — most campsites close from November to April, and camping outside of designated sites is illegal.


The next rung up on the Iceland accommodation budget spectrum are hostels. Reykjavik has a wealth of them, and a handful of other towns along the Ring Road have them too. Prices start as low as $20 in the winter, but skyrocket to $50 or higher in July and August. The good news is, most hostels include kitchens, so you can save money on food.


For the midrange traveler or a splurging backpacker, Iceland has lots of small guesthouses, country retreats, and family-owned hotels. In the countryside these may be on a working farm, which sometimes includes sleeping bag dormitory accommodation. Prices start at around $150 per night. Sometimes you’ll get use of a kitchen and/or breakfast included, but not always. Shared bathrooms are the norm.


In Reykjavik, you can find everything from grungy hostels to five-star hotels. If you’re going to splurge somewhere on your Iceland backpacking trip, this is where you’ll find the best value for money. Hotel prices are shockingly high during the summer. In winter, you can get a clean room with a shared bathroom and breakfast included for $70 a night in central Reykjavik.


While many people use AirBnB to book accommodation in Iceland, I recommend against it. It’s had a devastating impact on locals’ ability to find affordable housing. The government has started cracking down on developers who rent out whole apartment complexes on the site, but until the situation improves, using AirBnB in Reykjavik especially is contributing to the problem.


Food in Iceland


One of the best Iceland food options is the ever-present lamb hot dog.
Hot dogs are always an affordable food option when you’re backpacking across Iceland.


Iceland can’t compete with countries like Italy and France for its food scene, but you can still eat well here. Most of what you eat will be locally sourced and very fresh. And if you’re careful, you can eat out without blowing your Iceland backpacking budget.


Meat and fish are mainstays of the Icelandic diet. Lamb is the meat of choice, while popular fish include cod and langoustine. Both meat and fish are often served grilled or in soups. Hot dogs are also extremely popular.

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Rye bread is the carb of choice for Icelanders. Every small town has a bakery churning out fresh loaves of it each morning. Sandholt Bakery in Reykjavik is a particularly good place to try it.


Due to the climate and quality of the soil, most vegetables have to be imported or grown indoors. You can get high-quality tomatoes and cucumbers while backpacking Iceland, but most other veggies look pretty sad.


Dairy products are big as well — most famously Skyr. Technically a cheese product, it looks and tastes more like yogurt, and is often flavored with fruit and cream.


A meal at a sit-down restaurant in Reykjavik runs an average of 4,000 krona. If you’re traveling in Iceland on a budget, stick with cafe-style places instead — you can usually keep costs below 1,500 krona. Cafes are easy to find in Reykjavik. If you’re on the road, the grills inside petrol stations serve surprisingly decent food for prices that fit into any Iceland travel budget.


Self-catering is a good option when backpacking Iceland, especially for lunch. Bonus is the cheapest supermarket, but Kronan has better produce. Every decent-sized town has at least one supermarket.


Note that a couple of the typical Icelandic delicacies — namely whale meat and puffins — still appear on restaurant menus. These are vestiges of a time when the population of Iceland was so small that they could hunt whales and puffins sustainably. However, given today’s tourist numbers and the alarming decline of puffins, you should stay away from both.


Drinks in Iceland


One of the best things to do in Iceland is warm up in one of Reykjavik's cozy cafes.
You can always find passable coffee when traveling to Iceland. Reykjavik has the best selection of cafes.


Icelanders run on caffeine. Reykjavik is filled with cozy third-wave coffee shops, every petrol station brews copious amounts of coffee, and you can even buy a cup at most souvenir shops at Iceland attractions! The quality isn’t always the best, but if you’re jet-lagged or coming off a late-night Northern Lights tour, it’ll do the trick. A cup of coffee usually runs about 400 krona. “Coffee” usually refers to American-style filter coffee, while “espresso” is specifically labeled that on menus.


Beer and liquor are also enormously popular in Iceland. Reykjavik has far better nightlife than most cities of its size. Most cafes turn into bar/clubs at night, live music is everywhere, and people stay out until 4 am or later. Drinking is serious business — but it’s also extremely expensive. Stop at the duty-free shop at the airport when you arrive and try to stick to one happy-hour drink when you go out. Outside the capital, most people turn in early. Mid-sized towns like Akureyri have more limited nightlife.


There is absolutely no need to spend money on bottled water in Iceland. Simply bring a reusable water bottle and fill up at the tap — it’s some of the cleanest water in the world.


Activities you can do while backpacking Iceland


To keep your backpacking Iceland budget low, look for free activities like hiking in the national parks.
Hiking in Thingvellir National Park was one of my favorite Iceland activities — and better yet, it was free.


The number of things to do in Iceland seems endless. The only limits are your time, the season you travel in, and your budget. While road-tripping around the country and taking in the sights is extremely affordable, guided activities and adventure trips add up fast.


Most Iceland attractions center around the natural world. The country’s weird volcanic landscape offers ample hiking opportunities for active travelers. More sedentary backpackers can simply enjoy photo shoots at the myriad waterfalls, black sand beaches, and lava fields.


When planning a trip to Iceland and deciding when to go, think about which activities matter most to you. In the winter, some of the most popular Iceland activities include hiking on a glacier, snowmobiling, and visiting an ice cave. The most popular summer-only tours are hiking in the Highlands, searching for puffins, and seeing the inside of a volcano. You can go horseback riding, whale watching, and snorkeling in the Silfra Fissure any time of year. Day hikes in Thingvellir National Park are also open year-round.


If you have to hire a guide for an activity you want to do, expect to spend upwards of $100 for the adventure. This doesn’t include transportation. Tours from Reykjavik that include transportation usually run around $200+. If you want to travel Iceland on a budget, pick the one or two activities you can’t miss and skip the rest.

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The one activity you can’t miss in Iceland is soaking in one of the country’s thermal pools. The Blue Lagoon is the most famous, but cheaper options include the Secret Lagoon and the swimming pools in most small towns.


Transportation in Iceland


Driving in Iceland is a great way to get around, but be careful -- the weather can change quickly.
The best time to visit Iceland if you want to self-drive is summer. Driving in Iceland in winter can be dodgy.


The most popular way to travel when backpacking Iceland is renting a car. If you’re in a group of at least two people, it’s also usually the cheapest option. Compact 2WD vehicles start at around $80 per day plus petrol. This includes some insurance. If you plan to venture into the Highlands or are traveling in winter, choose a 4WD for driving in Iceland instead — this will run you about $120 a day.


The Ring Road is in good shape and paved the entire way. You’ll have to cross a couple mountain passes on your way to the east coast, but outside of winter months this isn’t a huge deal. The biggest risk is other travelers who pull over in really stupid places to take photos. Don’t be one of them.


If you want to go to the Highlands or other more off-the-beaten-path parts of the country, prepare for road conditions to be much more questionable. You may even have to ford rivers. Take a very good map or rent a GPS, and read up on driving safety.


In the summer, an extensive bus network covers the country, with daily departures to most places along the Ring Road. Don’t kid yourself — tickets are still extremely expensive. But for anyone traveling in Iceland alone and on a budget, or anyone not confident driving, it’s a good alternative.


Unfortunately, public transportation is limited in the winter. You may be able to get between major cities on weekly bus routes. But more often than not, you’ll have to rent a car or take a tour. Minibus tours departing from Reykjavik are a decent option if you’re backpacking Iceland solo and don’t want to pay for your own car rental.


Safety when backpacking Iceland


Most Iceland activities are very safe as long as you take a guide. Don't ever walk on glaciers alone when backpacking around Iceland.
The natural world provides many of the best Iceland attractions, but also presents some risks. Watch out for ice around waterfalls.


From a crime and security standpoint, backpacking Iceland is very safe. Reykjavik doesn’t even have the pickpocketing problems that other major European cities have.


The bigger risks come from the natural world. The weather and the volcanic nature of the island can both create unpredictable conditions.


Iceland’s weather can change dramatically at the drop of a hat. Just because it’s sunny and clear on the coast doesn’t mean ten minutes up the road toward the mountains it isn’t windy and pouring rain/ice/sleet. No matter which season you visit Iceland in, travel with warm clothes.


Volcanic eruptions still happen regularly all over Iceland. Stay abreast of the local news while traveling and avoid any dangerous areas. If you’re exploring geothermal regions, stay away from any water coming out of the ground. It’s often boiling-hot.


Never, ever walk on a glacier without a guide, crampons, and an ice ax. Even if you’re a confident hiker, you still risk falling into a crevasse. Similarly, don’t enter ice caves or lava caves without an experienced guide — they’re liable to collapse at any time.


For the most part, if you use basic common sense, Iceland’s nature is unlikely to disrupt your trip beyond making you occasionally cold and wet. But it’s better to be prepared.


Iceland travel advice for women alone


Backpacking in Iceland alone as a woman is totally safe.
Safety isn’t a major concern for solo female travelers planning a trip to Iceland. Travel here is easy and hassle-free.


Backpacking Iceland is easy as a solo woman. You’ll meet other travelers everywhere. It often feels like the country has more tourists than locals. And Icelandic men are respectful and kind. Icelandic women go to bars and restaurants alone and dress however they like.


Reykjavik is an exceptionally safe city. You don’t need to worry about walking back to your guesthouse at 1 am after a Northern Lights hunt, for example.


The one downside to solo female travel in Iceland is the cost of transportation. Renting a car as a solo traveler is not affordable on a backpacking budget. Tours and bus tickets (summer only) are often cheaper and a good way to meet other travelers. But you sacrifice the flexibility to do your own thing.


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Iceland travel is expensive -- but it's so worth it. This travel guide will help you plan the perfect trip, including all the best things to do in Iceland on a budget. Blue Lagoon, Golden Circle, South Coast, Northern Lights and more. #travel #iceland

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5 years ago

Great to see it’s possible to do Iceland on a budget. It’s been on my list of places I’ve wanted to go for so long but have been a bit put off by the prices. Love the idea of hiking through Thingvellir – especially as it’s free!

Danielle Farideh Travel Blog

This is an amazing guide! Gonna be so helpful for my trip this summer!

5 years ago

Great all-inclusive post! I am a budget-traveler so I appreciate your suggestions. Iceland is on my bucket list, hoping to make it there by the end of 2019!

5 years ago

Such a great post! Love how you even list the expenses:) Budget traveling is definitely what i obt for and I really hope to go to Iceland some day and do something like this!

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