Last Updated: 8/1/23 | August 1st, 2023
Over the past decade, tourism to Iceland has been on the rise. Offering stunning natural vistas, charming towns and villages, epic hikes, and all the hot springs you could ever want, it’s no wonder that tourists have been flocking here in droves.
The once-quiet streets of Reykjavik are now busy and bustling with tourists and locals alike — especially during the fleeting summer months.
Not surprisingly, that has led to a slow and steady increase in prices. And Reykjavik was by no means a budget destination to begin with!
Is it still possible to visit Iceland’s charming capital city without breaking the bank?
It is — but you’ll need to get creative.
To help keep your budget intact, here’s how to save money in Reykjavik during your next visit:
Table of Contents
14 Ways to Save Money in Reykjavik
1. Cook your own food – Eating out in Iceland is expensive and — like most capital cities — Reykjavik is especially expensive. While there are a few places I recommend (more on those later), it’s best to avoid eating out much as possible if you want to stick to a budget.
Instead, pick up some groceries like pasta, eggs, skyr (an Icelandic cultured dairy product), rice, chicken, and some veggies. Most hostels, Airbnbs, and even hotels have kitchens that allow you to cook your food. Additionally, many grocery and convenience stores have pre-made sandwiches and salads for around 400-500 ISK. If you’re really on a tight budget, skip the meat — it’s the most expensive of the staples.
2. Drink on a budget – Reykjavik has some of the best nightlife in the world. It goes late into the night, with bars closing at 4 or 5am! Why? Because no one goes out until 1am!
In a country where alcoholic drinks cost so much (1,400-1,600 ISK for a beer, for example), people sit at home and get sauced until the last possible second. Hit the happy hours at the bars or hostels and get beer for 850-1,000 ISK.
Even better than happy hour prices is to purchase your alcohol duty-free when you arrive in the country or at the state stores called Vinbudin. You’ll save about 40% off the bar prices.
And if money is super tight, skip the booze entirely. You’ll save a fortune.
3. Stay with a local – Reykjavik has an active Couchsurfing community. Getting involved with the community is a surefire way to get local insights, meet wonderful people, and save money with a free place to stay. The best way to lower your accommodation costs is to not have to pay for it!
Even if you don’t want to stay with a local, download the app and use the “Hangouts” feature to meet locals and pick up some insider tips!
4. Split an Airbnb instead of using a hostel – If you’re visiting with friends or family, I would advise against getting dorm rooms. Hostel dorms cost 4,500-7,500 ISK per person, but you can get entire homes or apartments on Airbnb from 19,000-25,000 ISK per night. If you’re traveling in a group of three or more people, Airbnb is generally the most affordable choice.
5. Camp – If you don’t mind staying a bit out of the city center, you can camp at Reykjavik Campsite for 3,200 ISK per night. There’s also a 10% discount if you book online. It’s the cheapest paid option in the city. There are many camping rental stores in the city, too, where you can rent your own gear if you don’t have your own. You can then use that gear to camp around the island as you explore, saving you even more money.
6. Eat at the street stalls – Not into cooking? Stick to the street stalls serving pizza, sandwiches, kebabs, and Iceland’s famous hot dogs that line Ingólfstorg square around the main tourist information center and Lækjartorg (the square near the Grey Line office). You’ll find sandwiches and kebabs for around 1,300-1,800 ISK while the hot dogs are 550-650 ISK. Everyone loves the famous Baejarins Beztu Pylsur hot dogs (President Clinton went there); they are worth eating if the line isn’t long.
7. Enjoy some soup – If you’re looking for a warm meal to fill your stomach, you can find a few Asian noodle places that offer hearty portions for around 1,300-2,200 ISK. My favorites are Noodle Station and Krua Thai.
8. Take a free tour – Want to know the history of the city and Iceland but don’t want to pay for the museums? Don’t miss City Walk’s Reykjavik Free Walking Tour. It’s really informative and takes you around a lot of downtown.
If you want to splash out for a paid tour, check out GetYourGuide. They have a ton of tours and day trips on offer so there’s something for every interest and budget!
9. Get the city card – Though a small city, Reykjavik has some tremendous museums and art galleries (I especially love the National Museum; it has an extremely detailed history of the country). If you plan to see a lot of the sights in the city (and you should), the Reykjavik City Card gets you free entry into all the major museums, free rides on Reykjavik city buses, free entry to Reykjavik city thermal pools, 10-20% off other attractions and tours, and even 10% off a few restaurants and bars.
The 48-hour card is 6,400 ISK but easily pays for itself. There is also a 24-hour card for 4,600 ISK and a 72-hour card for 7,890 ISK.
10. Rideshare outside the city – If you are looking to head out of the city (to visit the Blue Lagoon, Golden Circle, or anywhere else), expect to pay a lot of money for a tour. (If you ARE looking for a tour though, GetYourGuide is the best place to find them as it’s an online marketplace offering a ton of different tours from local providers.) You could rent a car, but at least 13,000 ISK per day.
The cheapest way to get out of the city and explore is to check for rides on hostel bulletin boards (even if you aren’t staying at one), Couchsurfing, or Samfera, Iceland’s ridesharing site. They are filled with travelers looking — and giving — rides throughout the country. All you have to do is share costs!
If you don’t want to spend any money, you can also hitchhike. Iceland is one of the easiest and safest countries in the world for hitchhikers! Hitchwiki has a lot of information on hitchhiking in Iceland.
If you want to rent a car, use Discover Cars. You can then try to find people to split the costs with to save money.
11. Enjoy the outdoors – Reykjavik is filled with amazing things to see and do for free. If the weather is nice (or at least not terrible, like May-September), walk around. Enjoy the narrow streets and colorful houses, watch the ducks in the big lake in the center of town, hang out in a park, walk the waterfront, walk the long walking and biking path near the airport (it’s stunning and goes through some small beaches, parks, and a residential area.
Also, be sure to visit Nauthólsvík Beach and its hot spring or the Grotta island lighthouse at the far end of town.
12. Visit during the shoulder season – From September/October to May, prices for hotels, activities, and boat rentals are lower and you can avoid crowds. During the shoulder-season, there aren’t as many attractions open (even if there’s good weather); however, with so many natural places to explore, this shouldn’t be that much of a problem. I’d recommend visiting in September/October, or April/May.
13. Bring a water bottle – A bottle of water costs about 350 ISK. That can add up really quick. Bring your own bottle and refill from the tap. The water in Iceland is exceptionally clean and safe.
14. Buy discounted meat – I know it sounds gross, but like most Scandinavian countries, Iceland has super strict food laws that have them mark meat as “expired” way before most other countries do. The meat hasn’t gone bad — but rules are rules. As such, you can often find meat at 50% off the original price in the grocery stores on the day of expiration. This is when most locals buy their meat.
My Personal Recommendations
Not sure what to see or do during your visit? Here are some of my favorites attractions, restaurants, and free and cheap things to do in Reykjavik:
Attractions: Reykjavík Botanical Gardens, Grotta, City Hall, Hallgrímskirkja, National Gallery of Iceland, National Museum of Iceland, The Penis Museum (yes, it’s a thing and it’s very weird), Reykjavík Art Museum, Árbæjarlaug and Laugardalslaug swimming pools.
Restaurants: The Laundromat Cafe, Noodle Station, Glo, Grill Market ($$$), Foodcellar, and Krua Thai.
Coffee shops: Kaffihús Vesturbæjar, Reykjavik Roasters, Kaffitár, Café Babalu, and the café in Mál og Menning (which is my favorite).
Bars: Lebowski Bar, Kaffibarinn, Kiki, and The Dubliner.
How Much Should You Budget?
Overall, expect to spend around 8,000-9,000 ISK per day on a backpacker budget. This means you’ll be staying in a hostel dorm, cooking most of your meals, doing most of the free and cheap activities, and not drinking.
If you want to do more paid activities, have a few nicer meals, and go out to the bars, expect to spend between 10,000-13,000 ISK per day.
If you want to splash out and stay in a nicer hotel, eat out every day and at nicer restaurants, have more drinks, and do more paid attractions and tours, expect to spend at least 36,000 ISK per day. This is just the ground floor for luxury though. The sky is the limit — especially in pricey Iceland.
Reykjavik isn’t as cheap as it used to be, and there are fewer ways to get by on a budget, thanks to price inflation and a tourist industry catering more to the mid-tier and higher-end market.
However, nothing is impossible!
With some careful spending — as well as focusing on the free nature attractions in the city — you can easily avoid emptying your wallet before you escape the city and explore the country!
Get the In-Depth Budget Guide to Iceland!
Want to plan the perfect trip to Iceland? Check out my comprehensive guide to Iceland written for budget travelers like you! It cuts out the fluff found in other guides and gets straight to the practical information you need. You’ll find suggested itineraries, tips, budgets, ways to save money, on and off the beaten path things to see and do, and my favorite non-touristy restaurants, markets, bars, transportation tips, and much more! Click here to learn more and get your copy today.
Book Your Trip to Iceland: Logistical Tips and Tricks
Book Your Flight
Use Skyscanner to find a cheap flight. They are my favorite search engine because they search websites and airlines around the globe so you always know no stone is left unturned.
Book Your Accommodation
You can book your hostel with Hostelworld as they have the biggest inventory and best deals. If you want to stay somewhere other than a hostel, use Booking.com as they consistently return the cheapest rates for guesthouses and cheap hotels. My favorite place to stay is:
- Hlemmur Square (Reykjavik)
Don’t Forget Travel Insurance
Travel insurance will protect you against illness, injury, theft, and cancellations. It’s comprehensive protection in case anything goes wrong. I never go on a trip without it as I’ve had to use it many times in the past. My favorite companies that offer the best service and value are:
- Safety Wing (best for everyone)
- Insure My Trip (for those over 70)
- Medjet (for additional evacuation coverage)
Looking for the Best Companies to Save Money With?
Check out my resource page for the best companies to use when you travel. I list all the ones I use to save money when I’m on the road. They will save you money when you travel too.
Want More Information on Iceland?
Be sure to visit our robust destination guide on Iceland for even more planning tips!