18 Tips on How to Save Money in Iceland

Photo by Konstantin Stroginov

Alcohol prices are extremely high in Iceland, so the first thing you need to think about when you land in Keflavik Airport is to stock up in the duty-free store.

Each person traveling into the country has an alcohol allowance of 6 units which means that you can, for example, buy a bottle of spirits, a bottle of wine and a six-pack of beer before reaching your limit.

And don't worry, you won't have to knock it all back by yourself in a dark hotel room; consuming alcohol outside is allowed in Iceland so you are always free to drink your beer and wine in Reykjavík's parks when the weather is nice.

2. Don't Shop in 10-11

Photo by Alina Grubnyak

The most expensive grocery store in Iceland is 10-11. Shopping there will add at least 50% to your grocery bill from as compared to the low price stores like Nettó, Bónus, and Krónan. Though they are convenient and plentiful, your wallet will thank you for putting in the effort to go to a more reasonably priced shop.

For locals, the first rule of shopping for groceries in Iceland is to never be enticed by the luminous green sign of a 10-11. Secondly, if you absolutely must to go to one, make sure it is during the day, as they jack the prices up of many products at night.

• See also: 10 best cheap things to do in Reykjavík

3. Never Buy Bottled Water

The best drink in Iceland runs free of charge from every faucet, which means that by buying bottled water you are falling victim to one of the worst tourist traps in Iceland.

The quality of Icelandic tap water is remarkable, and you can ask for free water practically everywhere. You should, therefore, never have to buy water in Iceland unless you are in dire need of a container to fill up for free for the remainder of your holiday. Just let the cold water run; it's the same water that is being bottled.

Not only will this ease your budget, but your environmental impact.

4. Take Advantage of Happy Hours

With some bars going as far as charging over €10 for a pint of their most basic draught, visiting Icelandic pubs can quite quickly eat away your holiday savings. You should, therefore, tread the local way of drinking during happy hours.

Many Icelandic bars and restaurants offer discounted beer and wine from as early as 15:00 to as late as 21:00 every day.

Should you have developed a habit that's spinning out of control, you can download an exclusive happy hour app that helps you coordinate during the worst spells and make the most of the precious binge time.

• See also Nightlife in Reykjavík and Happy Hour - the cheapest beer in Reykjavik

5. Eat Out at Lunch Time - If You Must

Eating out is one of the most uneconomical activities you can undertake in Iceland, and it is relatively easy to blow one’s entire travel budget solely on food by frequenting restaurants.

Photo by Davide Cantelli

If you want to savour the Icelandic cuisine without having your wallet for dessert, you should eat out at lunchtime when the dish du jour is reasonably priced.

• See also: The Top 10 Best Value Places to Eat in Reykjavik

6. Use the Public Wifi

Don't let yourself fall victim to hidden charges and roaming fees. Free public wifi is available almost everywhere in Reykjavík and every shop, café, hotel, and restaurant will happily allow you to connect to their wifi without question.

• See also Top 10 best value places to eat in Reykjavík

7. Look to Swim in the Cheaper Pools

Photo from Wikimedia, Creative Commons, by Meltwaterfalls. No edits made.

Conveniently placed right next to Keflavik International Airport is the Blue Lagoon, which virtually every single tourist who sets foot on Iceland visits at least once.

Although this is the perfect place to gather strength after a long flight and experience the volcanic energy of the Reykjanes Peninsula, the downside is that it's rather expensive.

If you are travelling on a budget, seeking tranquillity and authenticity, you should visit the Secret Lagoon in the small town of Flúðir instead, or simply go to one of the very moderately priced swimming pools found all over Reykjavík and the countryside. A notably cheap option that is fun for all the family is the largest pool in the city, Laugardalur.

• See also Swimming Pools in Iceland

8. Hitchhike and Pick Up Hitchhikers

Iceland is a hitchhiker's paradise where you can usually summon a ride within minutes of waving the thumb. If you want to get out into nature on a shoestring budget, therefore, it is a convenient and safe way to get around. This, of course, should only be done in the bright summer.

During the winter there is less traffic, you will be exposed to all the harsh conditions for an unknown amount of time, you could easily get caught in the darkness of fog and not be seen, and it is not safe for cars to pull on the side of the road.

If you are driving around the country, you could also always pick up hitchhikers on the condition they chip in for gas.

• See also Tips for backpacking in Iceland

9. Avoid the Taxi Service

Photo by Peter Kasprzyk

With taxi flag falls starting at around €5.10, you'll be remarkably quick to realise how easy it is to walk around Reykjavik.

A short drive from the Central Bus Station to downtown Reykjavík will cost around €15.50, while it would only take you 15-20 minutes to walk the same distance.

If you plan to travel far from central Reykjavik, you should use the city's affordable and dependable public bus system.

Of course, however, if you are a distance from your hotel, the weather is dreadful and the buses are irregular, remember that your health is more important than your budget.

10. Always Book Well in Advance

Always remember that flights, accommodation, rental cars, and tours are much cheaper if you book well in advance. Often guests who arrive on the day are surprised by the extra expenses that incur that they hadn't taken into account when budgeting.

• See also: Flights to Iceland - All you need to know

11. Know Your Bank's "Service Charges"

Much the same as a criminal network, your local bank's ultimate goal is to make money, and like a criminal network, your local bank uses a variety of plots and schemes to accomplish this goal.

One of the most common and simplest is called a "foreign transaction fee," which is what the mafia calls "Pizzo," and what the police calls "extortion."

Photo from Wikimedia, Creative Commons, by Thorsten Schmidt. No edits made.

If you use your credit card to make a purchase in a foreign country, the bank will generally charge you a 3% conversion fee which, of course, means that for every $100 purchase, the bank sucks away an extra $3, under the official pretext that "there is a greater potential for fraud with international transactions, so it costs the banks money to protect the consumer."

To avoid your bank's protection rackets, you can either apply for special cards that don't charge for foreign transactions or simply travel with your cash in your pocket.

12. Drink Free Coffee

Photo by Nicolas J Leclercq

In most Icelandic banks, thermoses filled with hot free coffee are used to lure in future victims. If you are running an extremely tight ship, you should not shy away from helping yourself to a complimentary cup or two, every day for the duration of your holiday.

And if you mix it up by visiting numerous banks, you will definitely get away with drinking an obscene amount before ever being bothered by a single security guard.

This might not be enough to take down the entire system, but if you're methodical, diligent and brave, you might just go a long way towards winning back that foreign transaction extortion fee.

Note that while cafes are quite expensive in Iceland, when you pay for a cup of coffee at most, the price almost always includes a refill.

13. Cook Your Own Food

Photo by Nathan Dumlao

With Icelandic restaurant bills normally giving you that soul-wrenching feeling only a crooked auto mechanic can really replicate, you will do your sense of self-respect a favour by buying your own groceries and cooking your own food.

Make use of the kitchens found in all guesthouses, hostels and campsites in Iceland and your grocery bill for three days will be the price of a single meal in a mediocre restaurant.

You can also book accommodation in Iceland's countryside by booking a local's cabin or cottage, all of which come with a kitchen (and sometimes even your own personal hot tub). The website Bungalo lists Icelandic summer cabins, many of which are surprisingly cheap to rent.

14. Hike Around Reykjavík

If you're spending a few days in Reykjavík and have your mind set on experiencing an easy hike in the Icelandic wilderness, but do not have the means to invest in a guided tour, you should consider hiking Esjan, Reykjavík's mountain, or the geothermal valley of Reykjadalur instead.

The Mars-like Rauðhólar (red hills) are also easily accessible by bus, car or bicycle from the city centre. This 5200-year-old cluster of pseudo-craters is a part of Reykjavik's nature reserve Heiðmörk, a popular refuge where locals find peace and stillness in nature's embrace, only a short distance away from the crowded and bustling streets of the capital.

15. Connect With Locals

Most Icelanders are compassionate and hospitable people who take very kindly to visitors. According to a recent survey, conducted by the World Economic Forum, Iceland is not only the most peaceful country in the world but also the friendliest.

Helping strangers in dire need of assistance has long been Iceland's unofficial national sport, so if you really need some advice, feel free to ask; you will almost always be treated with kindness and respect. You can also plan ahead and connect with locals through our page.

16. Shop for Memorabilia in Thrift Shops

Sadly, the so-called "Puffin Shops"—souvenir boutiques which are only tailored to gullible tourists—have in the last few years become one of Reykjavík's distinguishing features.

In these overpriced dens of mass-produced sweatshop garbage from China, you will never find anything Icelandic, let alone memorable. Most of them made a huge trade in polar bear teddies, an animal that doesn't even live here.

Should you be looking for authentic, modestly priced Icelandic memorabilia, you would do well to visit the Kolaportið weekend flea market by the Old Harbour, or the Red Cross thrift shop on the Laugavegur shopping street.

17. Go Camping

Photo by Pavlo Brodsky

There is no cheaper nor better way to spend a summer night in Iceland than in a tent. Camping is a sound way of establishing and preserving your fundamental connection with nature, and nothing in the world comes close to replicating the feeling of waking up to the soft and all-encompassing morning song of the Icelandic wilderness.

Since almost all Icelandic towns and villages run at least one campsite, you will always find a place to pitch your tent, wherever your adventures may take you.

• See also: Camping in Iceland

18. Use Equipment Rentals

Iceland's rugged landscapes and dynamic weather patterns are known to catch even the most seasoned travellers off guard and knowing how to pack for travel in Iceland will always be essential to ensuring the quality of your travel experience.

But although carrying a few indispensable items in your backpack might make the difference between a good and bad journey, there is no need to make a huge investment in camping equipment should you not already be in possession of the essentials a journey into the Icelandic wilderness demands.

Camping equipment rentals can supply you with everything you need—from hiking shoes and warm layers to tents and mattresses—and save you from spending a large portion of your travel savings on things you might not be using again. It will also save you money on flight baggage.