Iceland is by far the most expensive country Brandon and I have ever visited. Everything costs way more than what you’d expect to pay in the US: groceries, dining out, admission tickets, you name it. We’ve heard a variety of explanations for why things cost so darn much, and they boiled down to three main factors: 1) the Icelandic Krona is the strongest it’s been since the 2008 financial crisis, 2) tourism in Iceland has increased dramatically in the last 3-4 years (up to a predicted >2M this year) and business owners & the tourism board are taking advantage, and 3) Iceland taxes alcohol heavily (up to 90% of the sale price represents taxes and fees) to “maintain a prosperous welfare state at the edge of the habitable world.” Regardless of the explanation, traveling to Iceland will put a dent in your wallet and requires some know-how and discipline if you want to maintain a reasonable budget. We prepared by reading advice from other travelers like Nomadic Matt and Kathleen Elkins and set a daily budget of $50 per person, not including lodging and rental car fees (paid for while we were still employed). After five days in Reykjavik and the southeast countryside, our average daily spend was $41, and we did it without feeling deprived. Here are our six tips for sticking to a budget in Iceland:
1. Find lodging with a kitchen. We booked rooms in Reykjavik and Reykholt via Airbnb, and each provided access to the kitchen in the house. This allowed us to buy ingredients at the discount grocery store, BÓNUS, for most of our meals. Shopping at the local grocery store was fun; we could still sample local fare, and figuring out translations to foods like kjuklingaalegg was pretty amusing. Try to find a BÓNUS (the one with the pink pig logo) wherever you are, as they are cheaper than more convenience-type grocery stores like Samkaup Strax.
2. Take advantage of happy hours. As noted above, booze is exorbitantly expensive in Iceland. Many Reykjavik bars and restaurants advertise happy hour specials, and they go surprisingly late into the evening (until 7 or 8pm). The prices still don’t qualify as “cheap,” but they at least bring drinks down to normal city prices. Our favorite was Kaffibarinn, a cozy bar just off the main drag Laugavegur, which had several local beers on tap for a happy hour price of about $7.50 per pint. You may also be tempted to save money on beer by buying it at the grocery store, but you’ll be disappointed. Much like we found in Utah, Iceland caps the alcohol percentage of the beer sold in grocery stores. It goes by a “light beer” label and tops out at 2.2% ABV. You’ll need to find one of the state-owned liquor stores, Vínbúdin, to buy the full strength stuff.
3. Eat hot dogs! We heard this from nearly everyone who had been to Iceland, and I’ll repeat their advice. Hot dogs are ubiquitous in Iceland and the only reasonably priced food you can find outside a grocery store (350-450 ISK depending on the place). I ate more hot dogs in five days in Iceland than in the last five years combined, and they were all pretty delicious. Our favorite was also our first, from the famous Bæjarins Beztu Pylsur cart in downtown Reykjavik. Standard toppings are ketchup, sweet mustard, remoulade, fried onions, and raw onions. They’re pretty delicious with everything, but if you don’t have any gum handy you may want to hold the raw onions.
4. Want not hot dog? Share dishes and find free refills. It’s fun and interesting to try local fare wherever you are, and Iceland has some truly unique options. If you dine out, sharing a sampler plate is a good way to taste a few different dishes without spending too much. We shared “Icelandic Plate I” at Cafe Loki, which provided enough variety and quantity for us to feel like we had a good taste of local cuisine. Our Airbnb hostess also led us to a great lunch spot, Almar Bakery, that offered all-you-can-eat soup, bread, and coffee for 990 ISK. We filled up on delicious fresh-baked bread and homemade soup before our hike to Reykjadalur Hot Springs, all for less than $10.
5. Don’t fall for the tourist traps. With so many things to see and do in Iceland that are free of charge, we avoided almost all attractions with admission fees. Go to the 360 degree observation deck at Perlan (free) instead of taking the elevator up to the top of Reykjavik’s famous church, Hallgrimskirkja (900 ISK). Find one of the lesser known natural hot spring pools or “hot pots” via HotPotIceland.com (mostly free) instead of going to the Blue Lagoon (6100 ISK and up). For impressive and abundant waterfalls, road trip out to Hjálparfoss, Gjáin, and Háifoss in the Þjórsárdalur region instead of Seljalandsfoss (700 ISK parking fee) to the south. On a clear day you’ll also be treated to close-up views of Hekla, one of Iceland’s oft-active volcanoes.
6. Visit popular spots late. This tip only really applies in summer, when daylight will carry you well into the night. Not only will visiting attractions like Gullfoss, Geysir, and Kerið after 9pm or so keep crowds to a minimum, it can also save you money. The crater lake Kerið charges a 400 ISK admission fee, but the ticket counter closes around 9pm. You can still visit the crater and walk around after that point, you’ll just miss out on the brochure. Part of me doesn’t want to admit we shirked the fee, but locals we talked to lamented the rising prices of this attraction without spending any of the revenue to improve the site, which helped me sleep at night.
Iceland is not cheap, but with a little bit of planning and strategy it’s possible to quell the sticker shock. These are just the things we learned in our short visit to Reykjavik, the Golden Circle, and the route to Vik. At the time of this post, the exchange rate was 105 ISK to 1 USD. Please let us know what you think or if you have any additions in the comments!