The Land of Fire and Ice is an adventure traveler’s wonderland. There is absolutely no shortage to the incredible tours you can take through the country, even just the ones that are simpler day trips beginning and ending in capital city Reykjavik. With accommodations and dining being so pricey, it would be easy for an Icelandic vacation to cost thousands upon thousands of dollars. While Iceland will probably never be a true budget destination, you can use careful planning to keep your costs reasonable.
Where to Stay
Yes, a dorm. Hostels, contrary to popular belief, can be quite comfortable and are welcoming to travelers from all walks of life. You’ll certainly see lots of college age backpackers staying in dorms, but millennials don’t have the monopoly on needing to save a few bucks on lodging. There are plenty of older couples, solo travelers, and families with kids staying in hostels too. Many hostels also offer private rooms that cost a bit less than a hotel room, if you can’t bring yourself to share a little bedroom space.
If you are open to dorms, there are some great ones available in Reykjavik. Hlemmur Square’s 14-bed dorms are very spacious and laid out in a way that makes you feel like there are only 6 beds in the room. KEX Hostel is also extremely popular and a bit more social than Hlemmur Square if you’re traveling alone and want to meet people.
You may also find it worthwhile to pay for a slightly more expensive hostel if it includes breakfast, as food costs in Iceland are anything but cheap. (They do have to import most things, after all.) Do your research and work out what will be most cost effective for you.
Where to Eat
Self-catering is often the way to go if you’re staying in Reykjavik for longer than a day or two. There is a Bonus budget supermarket on Laugavegur, the city’s main central street. Stay in a hostel or an Airbnb rental where you’ll have access to a kitchen, pick up a few ingredients, and cook one healthy, inexpensive meal that will last you through a few servings.
When you’re out and about, the cheapest and most famous eats in town can be found at Baejarins Beztu Pylsur, a hot dog stand frequented by locals and tourists alike. The stand’s sausages are a blend of beef, pork, and lamb with the casing left on, giving them a rich flavor and satisfying snap that dogs in the States can’t compete with. Order one with the works – raw and fried onions, ketchup, sweet brown mustard, and tangy remoulade – for less than $4.
If you’d rather sample some of Iceland’s famously fresh seafood, make a beeline for the Old Harbour district. Fish and chips make an appearance on many a menu and you’ll find the best deal at Icelandic Fish and Chips on Tryggvagata. You’ll also likely find a stand or two near the docks dishing out crispy cod with the Icelandic version of chips, which are closer to roasted potatoes than the chips Brits and Yanks may be more familiar with.
Finally, few first trips to Iceland are complete without a visit to Saegreifinn, or “Sea Baron” in English, also on Tryggvagata. Every tourist you see in the place will have a piping hot bowl of creamy lobster soup, the chunks of “lobster” within actually being langoustines, an Icelandic specialty. Meanwhile, all the locals will likely have a grilled seafood skewer. If you’re traveling with a partner, or just feel like treating yourself, take the opportunity to try both for a total of about $25.
Keep an eye out for Part Two of our budget guide to Iceland, to find out how to save money on attractions and entertainment!