How to Save Money in Iceland (Without Living on Instant Noodles)

Iceland is gorgeous. It’s wild, remote, and feels like Mother Nature went all out designing it. But it’s also... expensive. Like “should I sell a kidney for this sandwich?” expensive.

I went solo to Iceland—something I never thought I’d be able to do when I started traveling. And while the landscapes were the stuff of dreams, the prices gave me the occasional mild panic attack. But I survived (thrived, even!) without selling an organ. So here’s your friendly guide to saving money in Iceland while still having the time of your life—especially if you’re traveling solo.

Let’s go:

1. Consider Hostels & Airbnbs

Hotels in Iceland can be… emotionally damaging to your bank account. Hostels, on the other hand, are cozy, social, and often come with kitchens—a huge win for budget travelers. While I’m not a big hostel person myself, they’re worth considering if that’s your vibe. Personally, I always lean towards Airbnbs in Europe. They give me privacy and the chance to chat with local hosts or fellow travelers. My Airbnb in Reykjavik was super cozy—private room, full kitchen, and even laundry access (I did laundry thrice, which saved both money and packing space!). Most of my breakfasts and dinners were at “home,” which really helped cut costs. Bonus: I had great conversations with the host and another guest staying next door. In a place like Iceland, you don’t need fancy accommodation—you’ll be out exploring most of the time anyway. All you need is something clean, comfy, and budget-friendly. I got my place for under $90 a night in the shoulder season. Not bad for Iceland!

Listing of the Airbnb where I stayed for 7 nights

2. Go Grocery Shopping Like a Local & bring snacks from home

Supermarkets like Bonus (look for the drunk-looking pink pig), Krónan, and Nettó are your new BFFs. Stock up on bread, skyr (Icelandic yogurt boasting 11% protein—four times more than regular yogurt), fruits, and snacks. Even if you don’t cook, this will save you from blowing $25 on a salad. Also, carry a stash of energy bars, and dry fruits from home. I did and it came in so handy when nothing nearby was open or I just couldn’t justify a $15 sandwich. Pack light, but smart.

3. Ditch Restaurants (Most of the Time) & Book a Place with a Kitchen

Let’s be honest—solo dining in Iceland is...awkward and outrageously expensive. I treated myself to a meal or two, but most of my culinary adventures were DIY. Booking a place with a kitchen (hostel, guesthouse, or Airbnb) was the best travel hack ever. Whipping up pasta, soups, or just heating leftovers felt like a Michelin experience when you’re surrounded by such nature. And don’t even get me started on the joy of making your own morning coffee in pajamas—it’s underrated magic.

Also, shoutout to my Indian ready-to-eat packs. I cooked up some weird-but-wonderful combos using local groceries—like rye bread with bhaji (ready-to-eat ‘pav bhaji’ that I brought from India). Sounds chaotic, tastes iconic. Pro tip: pack enough of those meals from home and mix ‘em up with Icelandic bread or naan from local stores.

Remember, you’re here for volcanoes and waterfalls, not a 5-star food tour. Keep it simple, save the cash, and enjoy the view with your home-cooked masterpiece.

Rye Bread with Bhaji

Palak Paneer with Naan

4. Skip Bottled Water (Iceland’s Tap Water Is Basically Glacier Juice)

No need to ever buy bottled water in Iceland—it’s literally some of the purest in the world. Bring a reusable bottle and fill it up from any tap. Even public restrooms have glacier-fresh water. It’s free hydration with a side of smug eco-friendliness.

5.        Use Public Pools Instead of Expensive Spas

Everyone talks about the Blue Lagoon. But there are plenty of local geothermal pools that cost a fraction and come with major chill vibes. Think locals soaking, fewer crowds, and all the warm water bliss. While I skipped going to the pools myself, you may consider Sundhöllin in Reykjavik (recommended by a local) with hot tubs, steam rooms, and a cold plunge.

6. Travel Off-Season (Like I Did!)

March was chilly, sure, but it came with cheaper stays, thinner crowds, and magical snowy landscapes. Prices for flights and accommodation drop in shoulder months (October–April), and you get a solid chance of catching the Northern Lights. Win-win!

7. Don’t Overpay for Souvenirs

I get it—you want that puffin keychain. But Reykjavik shops can be pricey. Instead, check out supermarket gift sections, gas stations (weird but true), or local flea markets like Kolaportið. You’ll find handmade crafts and woollen stuff without breaking the bank. You’ll see cute volcanic rock jars and bottled moss—but save your krona. Nature is Iceland’s souvenir! Instead, pick postcards, wool socks, or local chocolate from supermarkets for way cheaper keepsakes.

8. Take Advantage of Free Walking Tours

Reykjavik’s free walking tours are a great intro to the city. You tip what you like (don’t be that person who walks off), and you’ll get a funny, informative rundown from locals. I learned more about Viking last names than I ever thought I would.

9. Use Public Transport in Reykjavik (Or Walk!)

Reykjavik is walkable and safe, and their local buses (Strætó) are efficient. Download the app, take advantage of weekly fare capping, and you’re good to go. Taxis? Only if your feet fall off. Solo traveler bonus: walking around helps you discover cute cafés and corners you’d otherwise miss.

10. Don’t Rent a Car (If You’re Like Me)

Driving solo in Iceland? Stressful. Expensive (with exorbitant cost of fuel). Snowy & Risky. Instead, I picked day tours that covered a lot and let me sit back and enjoy. Tour companies often have combo deals—watch out for them and book ahead. Use GetYourGuide to book all your tours, it’s not only convenient but also can save on currency mark-up since they bill in your local currency.

11. Pack Right So You Don’t Shop There

Iceland’s weather is moody. Bring thermal layers, waterproof everything, and solid shoes. Buying outdoor gear in Iceland will cost you a kidney. Pack smart, save money, and stay warm without shopping emergencies.

12. Buy a SIM with Data—Or Use Wi-Fi Everywhere

Iceland is super connected. Most cafés, buses, and even remote hostels have Wi-Fi. If you're staying longer, grab a prepaid eSIM with data (I typically use Holafly or Matrix). Helps with maps, booking tickets, and keeping your fam updated that you haven’t been eaten by a volcano.

13. Skip the Currency Exchange Drama

Iceland is basically cashless. Don’t bother exchanging money or withdrawing ISK at the airport. Every hotdog stand and gas station takes cards—even Apple Pay works. Save on conversion fees and ATM charges.

14. Split Costs with Other Travelers

I didn’t follow this one, as I was traveling solo. But, if you really are on a tight budget, then consider visiting Iceland with a group of friends, so that you can share the bulk of expenses like accommodation, meals and renting a car (makes sense to get a car when in group). If you’re an extrovert solo traveller not minding the company of others, then you may consider teaming up with your hostel mates and save costs on car rental and meals. Also, you may join various Facebook groups before your trip. Solo travelers post rideshares, tips, even hostel deals. It’s like crowdsourcing your itinerary from a friendly Iceland-loving community.

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Iceland tested my planning skills but also made me feel so alive. And I did it without going broke, all while traveling solo. There’s something powerful about figuring it all out on your own—budget hacks included. If you're dreaming of Iceland but worried about costs, trust me—it’s doable. Not always easy, but totally worth it. And when you're standing in front of a thunderous waterfall or under a green-dancing sky, you'll forget about all the budget pasta dinners you had that week. Now go forth and travel smart—your future self (and your bank balance) will thank you.