Getting to Iceland is pretty inexpensive, and rental cars look like they will be affordable, but once we got there it became clear that travel in Iceland is very costly. I read this in many articles and other travel blogs before going, and it still shocked me. Iceland is a beautiful place and there are ways to see it without spending a fortune. Here are the tricks I learned there and the things I'm glad we spent the money on.
I was expecting food to be expensive because I had read about it and yet it still surprised me. The first night we were in Reykjavik the grocery stores had already closed for the evening. (Thing to know: Grocery store hours are 11-6.) We went out to eat at the Laundromat Cafe on one of the main streets, Austurstræti. We spent $70 US on a tuna fish sandwich and a burger (no drinks). We had lamb soup and bread at Café Babalú, a popular inexpensive option, and it was still $17 US per person. This is a really yummy Reykjavik cafe, but eating there still drained over half of our day's food budget and the soup was not all that filling. The Icelandic hot dogs are a good option if you need to grab food that is not as expensive. They are quite delicious and available at most convenience stores as well as the famous hot dog stand in Reykjavik.
Bonus grocery store is a god send (pink pig on sign - you can't miss it). We were able to buy three big lamb steaks for $15 US, plus potatoes and a vegetable, from which we made three dinners. Of course, Skyr (custard like yogurt) is an Icelandic must for breakfast; the big containers can feed two people a couple of breakfasts. (The small containers of Skyr cost much more per oz. than the larger containers.) For lunch we bought some pepperoni, crackers, and cheese. We also got several bags of American flavored Doritos! We found that meat other than lamb and pepperoni was quite expensive. Definitely take along a little fold up travel cooler for food so you don't have to buy a big plastic one. This leads to my next tip...
Where to stay
If you book on Airbnb at least six months out you can find affordable private apartments with little kitchens so that you can cook your food. Hotels and guest houses are more expensive and don't offer the option to cook for yourself. If you book Airbnbs make sure they are registered businesses in Iceland (they pay taxes), which should be indicated in their descriptions. When, out of curiosity, I looked at accommodations closer to our trip only the hostels were less than $200 US a night.
Car rental is one of those things that looks inexpensive when you book online, but when you get to Iceland the many insurance options add up. We paid for 2 of 3 insurance options they offered and I'm glad we did because we didn't have to worry; we got basic insurance and ash insurance. We definitely were not expecting the ash insurance, coming from a home without volcanoes currently erupting. However, the cars in Iceland looked like they had some ash and small rock damage, and we definitely didn't want to pay for that afterwards. We also got Wifi for the car (about $15 US a day), which was great for GPS and figuring out where the last Bonus grocery stores were before heading to the rural places we visited. If you are renting from Budget in peak tourist season expect a line that could easily take two hours to get the car you reserved at the airport. Budget has reliable reviews in Iceland so it is good option, but some of the other reliable companies like Hertz didn't have lines. Horror stories abound of cheap rental cars in Iceland breaking down, which is why we went with Budget.
City vs. Town
Reykjavik is a cool city that feels more like a big town, but it seemed more expensive than smaller towns. I liked staying on the edge of the Snæfellsnes peninsula or out on the horse farm in southern Iceland because I like being in the country more than in cities (even though we had a great Airbnb in Reykjavik). The sights we saw in Reykjavik were cool, but we could have done them in one afternoon instead of two days. Everything was so expensive that we just did a free walking tour and then continued exploring ourselves.
THINGS TO GET BEFORE YOU EXIT THE AIRPORT!!!!
You can do almost everything by credit card in Iceland, however for toll roads and smaller sights like Mt. Helgafell on the Snæfellsnes Peninsula you need cash. We had to do quite a bit of searching to find an ATM in Reykjavik. Pull a little cash out at the airport if you are planning to explore beyond Reykjavik; there are several ATMs in the terminals.
The next important thing to get before you leave the airport is alcohol!!! If you are planning to go out and experience Reykjavik's nightlife or you like drinks with dinner, buy booze at the airport in the duty free store near baggage claim, ENOUGH FOR YOUR WHOLE TRIP EVEN IF IT IS A PAIN TO CARRY. Then have your drinks before you go out or go to dinner because one drink out can set you back $20 US easily. We bought a six pack of locally brewed IPA, which my hubby really liked (and he is an IPA snob), and the second cheapest vodka at the duty free, which is now my favorite Vodka ever. The only liquor stores, Vínbúðin, are in almost every town and have similar hours to the grocery store, but the alcohol is more expensive in those stores.
Have more questions about your upcoming trip to Iceland? Let me know and I'll answer to the best of my ability!