Best Things to Do in Iceland on a Budget

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You can do so much in Iceland on a budget because the views are free

Heading to Iceland to see the Northern Lights? It’s a popular bucket list item. And it can be pricey too, if you hire a guide. But budget travelers can relax. There are plenty of ways to have a great trip to Iceland without going broke. Added benefit? These suggestions will take you off the beaten tourist path.

Colorful mural in Iceland - taking pictures of murals is a fun thing to do when traveling to Iceland on a budget
Photo Credit: Carlen Dickerson

8 Best Things to Do in Iceland on a Budget

My freshman year of college my mom announced we would no longer be getting Christmas presents. At first I was extremely concerned. This can’t be – I’d been on the nice list all year long. Instead, she said, we will replace them with experiences. Every year for Christmas we pick a place off our bucket list, and make memories that will last much longer than any material item.

This past year we knew we wanted to go somewhere in Europe, but we had a limited budget and only five days to travel. I kept seeing ads for really cheap flights to Iceland (RIP Wowair), and all the travel influencers I followed were posting these unreal photos. We really wanted to make Iceland happen, but we were nervous about how expensive we heard the island could be.

Let’s be straight – the rumors are definitely true. Iceland is extremely expensive, but there are ways to make it much more affordable.

Explore the city of Reykjavik.

We flew into Keflavik – the international airport. From there it’s about an hour to the capital city of Reykjavik. We saved cab money by booking a shuttle bus to and from the airport in advance. We stayed at the super affordable and comfortable Stay Apartments near downtown Reykjavik. From there, we were able to walk all over the city.

There’s a lot to discover for free in Reykjavik just by exploring the graffiti-filled streets. We marveled at the beautiful Hallgrimskirkja Church of Iceland from the inside and out. Interestingly, we learned that Reykjavik means “bay of smoke.” It’s a port city right on the Faxa Bay. We spent time just enjoying the bay view.

Church in Iceland that is free to visit making it a wonderful activity when touring Iceland on a budget
Photo Credit: Carlen Dickerson

Pack food and/or visit the local supermarket.

We were warned that Iceland would be crazy expensive, so we packed as much food and alcohol as we could stuff into our suitcases. We honestly went a little overboard, but you can never have too many snacks (drinks are a different story – no comment there).

The most outrageous prices in Iceland are by far the cocktails, so don’t be too proud to pack a bottle or two if that’s how you like to vacation. As soon as we got to our apartment and unloaded, we walked over to a local supermarket called Bonus. We found all the basics we needed, plus some interesting Icelandic products that are quite fun to try to pronounce. (Add that as another free activity you can spend the entire trip doing – attempting to read anything in Icelandic.)

Try an Icelandic hot dog, or three.

The food may be expensive, but there are still some cheaper options. Icelanders are extremely proud of their Icelandic hot dogs… yes, you read that correctly and yes, we were just as confused. The hot dogs are all over the place, but we tried one at Hot Dog House because it had a great view of the ice skating rink in the middle of town. Pylsusinnep, a sweet brown mustard, is what sets the Icelandic hot dog apart from the classic American food we’re used to. I really liked the sweet sauce, but be warned that it may be a polarizing ingredient. I seriously enjoyed my dog, but my mom was not a fan of the unfamiliar topping. You can always request the hot dog plain.

Famous hot dog stand in Iceland where you can get cheap food, a tip for touring Iceland on a budget
Photo Credit: Carlen Dickerson

Swap the Blue Lagoon for the Secret Lagoon – it sounds cooler anyway.

While we were planning the trip, we really debated whether we should go to the Blue Lagoon. Ultimately, we chose the Secret Lagoon (Gamla Laugin) mainly because it was around $20 cheaper per person. It’s a natural geothermal hot springs located closer to Reykjavik. The Blue Lagoon is man-made and much farther away. I know you want to go to the much more well-known Blue Lagoon to get the Insta, but it’s super crowded. At the Secret Lagoon, we had the entire swimming pool to ourselves at one point and were able to get some amazing solo photos.

Black volcanic rock beach in Iceland seen from an inexpensive bus tour one of the best things to do when touring Iceland on a budget
Photo Credit: Carlen Dickerson

5. Enjoy the lagoon at night to catch the Northern Lights on the same dollar.

Instead of a day tour, we booked our trip to the Secret Lagoon through Grayline Tours, which includes pick up and drop off wherever you’re staying, even in the apartments we were at. The elusive aurora borealis is a natural occurrence, and no one can control whether you see them. If you choose to book a Northern Lights tour, it only includes driving out into the arctic, dark countryside to see a black sky. If the sky show doesn’t happen, you’re going to be pretty disappointed. The worst part: You won’t get a refund. If you book a trip to a geothermal bath, eat a full buffet dinner, and then happen to see the Northern Lights on the way back to the city, you just might have the greatest experience of your life. Seriously, I had tears in my eyes.

Northern Lights captured while touring Iceland on a budget
Photo Credit: Carlen Dickerson

Skip the Golden Circle tour, even if you’re a Game of Thrones fan.

We are hardcore GoT fans, so naturally we wanted to visit the filming locations. Regardless, it was basically the Golden Circle tour plus some. We visited Thingvellir National Park, and saw a geyser in the distance (really not sure if it was the Geysir or Strokkur, but it did the trick). Although we didn’t see the Gullfoss waterfall, we did see Thorufoss, which was one of the most beautiful places I have ever been (and much less tourist-y). We played with Icelandic horses, although no horseback riding. Our tour guide, Theo, was by far the most entertaining Viking we ever met.

A waterfall in Iceland seen from an inexpensive bus tour which is a good way to tour Iceland on a budget
Photo Credit: Carlen Dickerson

Or better yet… road trip.

Do as I say, not as I do. We did not rent a car because neither my mom, my sister or I are the safest behind the wheel, even in our home country. We booked the tourist-y bus tours. They aren’t horribly priced, but it would absolutely be much cheaper to rent a car.

There are so many cool free spots, like hiking trails, glacier lagoons and ice caves, that we missed out on because they weren’t included in our itinerary. We did do a full day trip to see Skogafoss, Seljalandsfoss and the beautiful black sand beaches on the south coast of Vik, where you can see the arch with the hole – Dyrholaey. The waterfalls were gorgeous, but my favorite was definitely Reynisfjara – a black beach with rock formations that look like they are from a different planet.

Eerie sky on an Icelandic beach which is a fun thing to see while touring Iceland on a budget
Photo Credit: Carlen Dickerson

Pass on whale watching.

We thought about booking a whale watching tour, but chose to skip it because it’s extremely expensive, and usually ends up being more of a headache (or stomachache) than it’s worth. Iceland is expensive enough; save your money for things you can’t see many other places, like lava fields and volcanic craters.

We made the best of our time and our budget – and my mom will be content to never return. She thoroughly enjoyed the experience, but after one too many overpriced meals and long bus tours, she felt she had seen enough. I hope to take my future kids to Iceland because I’d really love to go back to swim in the Myvatn nature baths and snorkel in the Silfra lagoon under the midnight sun.

Now, the Most Instragrammable Spots in Iceland!

Iceland is full of Insta-worthy spots. Here are just some of my favorites:

Reykjavik Street Art

While exploring the quirky capital city of Reykjavik, we were pleasantly surprised by the murals and wall art we found all over the city. Wall murals are a classic Insta background that can make any pic bright and eye-catching, even on a gloomy winter day. 

Any Lagoon or Geothermal Bath

Not going to lie, the lagoon was my full-on Insta-dream for the trip. My mom bought us matching cat ear earmuffs and I packed my cutest bathing suit in anticipation of getting the best Insta. Like I mentioned above, your best chance to get a solo pic is at the Secret Lagoon. My nighttime photo shoot really didn’t go as well as I had hoped, but it still ended up being my most engaging photo from the trip.

Northern Lights

I honestly didn’t expect to see the Northern Lights because I don’t have the best luck with that kind of thing, but we ended up seeing the most beautiful lights show our guide said he had seen in awhile. I had a real Instagram vs. Reality moment when I realized that the human eye cannot see the lights as well as a long-exposure camera can capture them. Don’t expect them to look like they do in the photos, but they’re still the coolest thing I’ve ever seen.

Reyjnisfara Black Sand Beaches & Rock Formations

If you’ve ever wanted a picture that looks like you’re on another planet, this is your ideal backdrop. Beware: many, many, many tourists have the same idea. I felt like I was in a millennial war zone fighting for the just one moment on the rocks for a photo. 

Any Waterfall

Waterfalls are just really pretty and people love them paired with waterfall-based puns in captions. I got a great photo with Skogafoss behind me because there’s a big open area right below the huge, symmetrical falls. However, in attempting to get this photo, I was soaked with freezing water, and my camera lens was covered in speckles of water. I spent the entire time we were at the location trying to get the best photo, and didn’t get to take time to just enjoy the view. So maybe just snap a photo of the waterfall by itself, you don’t need to be in every photo.

Editor’s Note: This post was written by Carlen Dickerson, who always says yes to free food or a spontaneous adventure. With a degree in broadcast journalism and a passion for storytelling, Carlen keeps her mind open and her camera busy. She currently works in D.C. as the Visual Storyteller for LEON Restaurants.

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2 responses

  1. I loved Iceland, it’s a great place to visit. I never heard of the Secret Lagoon, so will have to go there on my next visit. I want to go in summer next time and get a car and explore the whole island, though I won’t get to see the northern lights on that trip!!

  2. This article is so useful! Really want to visit Iceland – but if I do it’ll be on a pretty strict budget… Definitely bookmarking this article 🙂

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