The Ultimate Guide to Backpacking Iceland: Tips for an Affordable Adventure

The Ultimate Guide to Backpacking Iceland: Tips for an Affordable Adventure

Iceland, the “Land of Fire and Ice,” is a dream destination for many adventurers. With its dramatic landscapes, ranging from bubbling geysers and volcanic craters to towering glaciers and black sand beaches, Iceland offers a unique blend of natural beauty and thrilling experiences. However, the country is notoriously expensive, making it seem out of reach for budget-conscious travelers. Fear not! This ultimate guide to backpacking Iceland will provide tips and tricks to help you experience this Nordic wonderland without breaking the bank.

Planning Your Trip

Best Time to Visit

The best time to visit Iceland largely depends on what you want to experience. The summer months (June to August) offer milder weather, long daylight hours, and accessible highland roads. However, this is also the peak tourist season, which can drive up prices. If you’re on a budget, consider visiting during the shoulder seasons (May and September) when the weather is still relatively mild, and the crowds have thinned out.

The winter months (October to April) provide opportunities to see the Northern Lights and experience Iceland’s winter wonderland. However, be prepared for shorter days, colder temperatures, and potentially challenging driving conditions.


Flight prices to Iceland can vary significantly, so it’s best to book well in advance and keep an eye out for deals. Budget airlines like Wow Air and Icelandair frequently offer discounted fares from North America and Europe. Consider using flight comparison websites and setting up alerts to find the best deals.


Hostels and Guesthouses

Hostels and guesthouses are the most affordable accommodation options in Iceland. These establishments often offer dormitory-style rooms, which are perfect for solo travelers or those looking to meet fellow backpackers. Some popular options include:

KEX Hostel in Reykjavik: A trendy hostel with a lively bar and restaurant.

Reykjavik Downtown HI Hostel: A centrally located hostel with a cozy atmosphere and helpful staff.

Akureyri Backpackers: A great option in Northern Iceland with clean facilities and a friendly vibe.


Camping is a fantastic way to save money while experiencing Iceland’s stunning landscapes up close. The country has numerous campsites, many of which are open year-round. Some popular campsites include:

Reykjavik Campsite: Located just a short bus ride from the city center, this campsite offers modern facilities and easy access to Reykjavik’s attractions.

Skaftafell Campsite: Situated in Vatnajökull National Park, this campsite provides a perfect base for exploring glaciers and hiking trails.

Thingvellir Campsite: Located within the Thingvellir National Park, this campsite is ideal for exploring the Golden Circle.

Remember to pack appropriate gear for the weather and be prepared for rapidly changing conditions.


Renting a Car

Renting a car provides the freedom to explore Iceland at your own pace. However, rental costs can add up quickly, especially when factoring in fuel and insurance. To save money, consider traveling with a group to split the costs. Additionally, look for rental companies that offer older, more affordable vehicles.


Hitchhiking is a popular and accepted way to get around Iceland. The locals are generally friendly and willing to give rides to travelers. While it may not be the fastest mode of transportation, it’s a great way to meet people and share stories.

Public Transportation

Public transportation in Iceland is limited but can be an affordable option for getting around. Buses are available between major towns and cities, and several companies offer guided bus tours to popular attractions. Check out the Reykjavik Excursions and Strætó websites for more information on routes and schedules.

Food and Drink

Grocery Stores

Eating out in Iceland can be expensive, so consider cooking your own meals. Grocery stores like Bónus and Krónan offer a wide selection of affordable food items. Stock up on essentials like pasta, rice, canned goods, and fresh produce. Many hostels and campsites have communal kitchens where you can prepare your meals.

Convenience Stores and Gas Stations

While not as affordable as grocery stores, convenience stores and gas stations often have reasonably priced snacks, sandwiches, and hot dogs. Icelandic hot dogs, known as “pylsur,” are a popular and inexpensive option for a quick meal. Look for the famous Bæjarins Beztu Pylsur stand in Reykjavik for a taste of this local favorite.


Iceland’s tap water is some of the purest in the world, so there’s no need to buy bottled water. Bring a reusable water bottle and refill it from taps and drinking fountains throughout your trip.

Activities and Attractions

Natural Wonders

Many of Iceland’s most stunning attractions are free to visit. Some must-see natural wonders include:

The Golden Circle: This popular route includes Thingvellir National Park, Gullfoss waterfall, and the Geysir geothermal area. All three sites are free to visit, making it an affordable day trip from Reykjavik.

Seljalandsfoss and Skógafoss Waterfalls: These iconic waterfalls are located along the South Coast and are easily accessible by car or bus.

Jökulsárlón Glacier Lagoon: Witness the breathtaking sight of icebergs floating in a serene glacial lagoon. While boat tours are available, simply walking along the shoreline offers incredible views at no cost.


Iceland is a hiker’s paradise, with countless trails ranging from easy walks to challenging multi-day treks. Some popular hikes include:

Laugavegur Trail: This 55-kilometer trek through the Highlands is considered one of the best multi-day hikes in the world. While there are huts available for accommodation, camping along the trail is a more budget-friendly option.

Reykjadalur Hot Springs: Located near the town of Hveragerði, this easy hike leads to a geothermal river where you can soak in naturally heated waters.

Glymur Waterfall: A moderately challenging hike to Iceland’s second-highest waterfall, offering stunning views of the surrounding canyon.

Free and Low-Cost Attractions

In addition to natural wonders, there are several free or low-cost attractions to enjoy:

Reykjavik: Explore the vibrant capital city, with its colorful buildings, street art, and lively harbor. Don’t miss the iconic Hallgrímskirkja church, the Harpa Concert Hall, and the Sun Voyager sculpture. Many of the city’s museums, such as the National Museum of Iceland and the Reykjavik Art Museum, offer discounted or free admission on certain days.

Hot Springs and Pools: While the Blue Lagoon is a popular (and pricey) attraction, there are many other geothermal pools and hot springs that are more budget-friendly. Visit the Secret Lagoon in Flúðir or the Mývatn Nature Baths for a relaxing soak without the high price tag. Additionally, many towns have public swimming pools with hot tubs and saunas for a small fee.

Money-Saving Tips

Currency and Payment

Iceland’s currency is the Icelandic Króna (ISK). Credit and debit cards are widely accepted throughout the country, so there’s no need to carry large amounts of cash. However, it’s always a good idea to have some cash on hand for small purchases or in case you encounter a location that doesn’t accept cards.

Budget Accommodation

Consider staying in budget accommodation options such as hostels, guesthouses, or campsites. Booking in advance can help you secure the best rates. Additionally, look for accommodations that offer free breakfast or have kitchen facilities where you can prepare your own meals.

Travel Insurance

While it may seem like an unnecessary expense, travel insurance can save you a significant amount of money in case of unexpected events such as medical emergencies, trip cancellations, or lost luggage. Shop around for the best policy that suits your needs and budget.

How to Recreate the Experience

If you can’t make it to Iceland but still want to experience its wonders, consider the following alternatives:

Explore Local Natural Wonders

Many countries have their own unique natural attractions that can evoke the spirit of Iceland. Look for waterfalls, geysers, hot springs, and volcanic landscapes in your region. National parks and nature reserves often offer similar experiences without the need for international travel.

Visit Geothermal Spas and Pools

Recreate the experience of soaking in Iceland’s hot springs by visiting local geothermal spas, hot tubs, or saunas. Many wellness centers and gyms have facilities that offer similar relaxation and rejuvenation benefits.

Discover Icelandic Culture at Home

Immerse yourself in Icelandic culture by reading books by Icelandic authors, watching Icelandic films, or listening to Icelandic music. You can also try cooking traditional Icelandic dishes such as lamb soup, rye bread, or fish stew at home.

Virtual Tours and Documentaries

Take advantage of virtual tours and documentaries to explore Iceland’s landscapes and attractions from the comfort of your home. Many online platforms offer virtual experiences that allow you to “visit” popular sites such as the Golden Circle, Jökulsárlón Glacier Lagoon, and Reykjavik.


Is Iceland safe for solo travelers?

Yes, Iceland is considered one of the safest countries in the world, making it an excellent destination for solo travelers. The crime rate is low, and locals are generally friendly and helpful. However, always take standard precautions and be prepared for changing weather conditions.

Do I need a visa to visit Iceland?

Iceland is part of the Schengen Area, so travelers from Schengen countries do not need a visa for short stays (up to 90 days). Visitors from other countries may require a visa, so it’s essential to check the visa requirements for your nationality before traveling.

What should I pack for a trip to Iceland?

Regardless of the season, be prepared for unpredictable weather. Pack layers, including a waterproof and windproof jacket, thermal underwear, a warm hat, gloves, and sturdy hiking boots. Don’t forget essentials like a reusable water bottle, a good-quality camera, and a power bank for your electronics.

Can I see the Northern Lights all year round?

The Northern Lights are visible from late September to early April, with the best chances of seeing them during the darkest months of winter. However, sightings are dependent on weather conditions and solar activity, so there’s no guarantee you’ll see them during your visit.

Is it necessary to rent a car in Iceland?

While renting a car offers the most flexibility, it’s not essential. Public transportation, guided tours, and hitchhiking are viable options for getting around, especially if you’re on a budget. Consider your itinerary and preferences when deciding on transportation.

By following these tips and embracing a budget-conscious mindset, you can enjoy an unforgettable backpacking adventure in Iceland without breaking the bank. So pack your bags, lace up your hiking boots, and get ready to explore the Land of Fire and Ice!

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