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A budget-friendly travel guide to Iceland

Have you been dreaming of seeing the beautiful Northern Lights? While we may not be able to travel just yet, we can always start planning. Wrap up warm, explore ice caves, and be blown away by the natural beauty of Iceland and its friendly capital Reykjavik on a once-in-a-lifetime vacation!

In this travel guide to Iceland, travel blogger Pohtecktoes shows Singaporeans how to get the best out of spectacular Iceland on a budget without having to rough it!

5 tips on how to see Iceland on a budget

It’s no secret that Iceland is expensive. While it isn’t a budget destination, you don’t have to break the bank during your trip. In this guide to Iceland, we’ll share some tips on how you can make this trip happen on a budget.

In fact, we only spent about S$3,700 each for 12 days in Iceland inclusive of flights! The best part is that anyone can travel from Singapore to Iceland on a budget – without having to sacrifice too much comfort or miss out on any major activity.

Read on for our Iceland travel guide and how to explore the “Land of Fire and Ice” on a budget.

1. Choose the right season to visit

While the temperature in Iceland is the most comfortable in summer (avg. 10-13°C), it is also the most expensive period to visit. Tourists flock to Iceland in summer, so the demand for tourist essentials are high. Prices for accommodation and car rental in Iceland can end up being 2-4 times higher in summer compared to winter!

As such, for the budget-conscious, the best season to visit Iceland is winter, from November to March. Not only are things more affordable, you can also avoid the summer crowds and have a much higher chance of spotting the Northern Lights.

Tip: While it’s obvious to pack winter wear, don’t forget to bring a good windproof jacket. The winds can make it feel a lot colder than you’d expect based on the temperature.

2. Stay in hostels rather than hotels

Another way you can cut your travel budget is to save on accommodation costs. Why spend extra paying for hotel facilities you hardly use? After all, you want to spend more time exploring the sights instead.

Choose hostels instead of hotels while booking accommodation in Iceland. Hostels often have communal kitchens, which means you can cook from time to time to keep costs down.

There were two of us and we shared private rooms throughout our stay in Iceland. If you choose to sleep in dormitories, it’ll be even cheaper!

Where to stay in Reykjavik

Reykjavík Loft Hostel

Address: Bankastræti 7, 101 Reykjavik

This hostel has a great location. On top of that, it has a cosy lounge and bar at the top level that has a view of downtown Reykjavik.

Where to stay along the south coast

Vík HI Hostel

Address: Suðurvíkurvegur 5

This is the most affordable accommodation in Vik, which is a small town perfect for stocking up on supplies and visiting sights along the south coast. It is within walking distance to the black sand beaches, with little light pollution and cliffs that form the perfect backdrop for the Northern Lights.

Vagnsstaðir HI Hostel

Address: Suðursveit, A-Skaftafellssýsla

Surrounded by a ring of mountains, this is an ideal base for exploring the Vatnajökull region. It is literally on a farm, so the surroundings are dark and ideal for viewing the night sky. Do stock up on supplies though, because the nearest grocery store is 50km away.

3. DIY instead of taking tours

Unless you want to do an activity that needs guides and special equipment like ice caving or horse riding, there’s no reason to spend extra on tours.

Almost all the famous sights in Iceland are free of charge, and you can easily visit them on a do-it-yourself self-drive tour. Instead of sticking to the rigid schedule of a tour, you can travel at your own pace, stopping as often as you like, marvelling in the beauty of the countryside around you.

If you are travelling with a small group of friends, it makes even more sense to DIY as you can split the cost of car rental. You can even plan a campervan trip around Iceland. Just plan in advance so you can find cheap deals for vehicle rental in Iceland.

Tip: Check for updates on road conditions at Road.is every 3 hours. The weather can change very quickly, especially in winter, and roads may be icy or closed.

4. Cook your own food

One of the more savvy budgeting tips in this guide to Iceland is to cook your own food whilst travelling. Food is pretty expensive in Iceland. A simple meal can easily cost S$20-30, so it makes sense to cook in order to keep costs low.

Most days, we cooked our own breakfast and dinner, and either packed extra food or ate out for lunch. The cheapest supermarket is probably Bónus, so try to get your supplies from there.

To be honest, cooking our own meals was pretty fun and we got creative after a while. It was also a great way to make friends while sharing food with other travellers in the kitchen.

Of course, we indulged occasionally and made sure we tried all the famous Icelandic dishes too!

Tip: Outside of Reykjavik, supermarkets and convenience stores are harder to find. Make sure you stock up on supplies whenever you pass by a town!

5. Book flights in advance

Last-minute flights from Singapore to Iceland can be expensive. I suggest searching and monitoring flights early to get the best deal.

If you have some flexibility, use the “Whole Month” or “Cheapest Month” option on Skyscanner to search for cheap flights. I also used the “Price Alert” feature to monitor changes in flight prices. After a few weeks of monitoring, I finally booked a return flight 5 months in advance, from Singapore to Reykjavik, with a stopover in Helsinki.

Read more: A guide on how to find great travel deals anytime, anywhere with the Skyscanner app

Budget summary (per pax):

ItemCost per pax
FlightsS$1,331

AccommodationS$771
FoodS$425
Activities (ice caving, horse riding, entrance fees)S$370
Public transportS$24
Car rentalS$782

Total expenditure (per pax) = S$3,703

For the full itinerary and budget breakdown on this guide to Iceland, check out Pohtecktoes’ 12 Days Iceland Winter Itinerary – From Reykjavik to the South Coast.


Inspired by Pohtecktoes’ budget-friendly travel guide to Iceland? Book cheap flights, hotels and car rental via Skyscanner or check out and download our free Skyscanner mobile app for easy browsing and booking on the go.

Originally published in March 2016 and updated in May 2020. Any prices are lowest estimated prices only at the time of publication and are subject to change and/or availability.