16 Best Things To Do In Iceland On A Budget

Iceland offers endless adventures and natural wonders. Despite its reputation for being expensive, there are plenty of ways to explore this captivating country without breaking the bank.

From free or low-cost outdoor activities, such as hiking and scenic drives, to affordable cultural experiences, Iceland has a range of budget experiences for everyone.

Keep reading to discover some of the best things to do in Iceland without overspending, and get ready to start planning your next budget-friendly trip.

1. Take a road trip

If you’re looking for a road trip that’s packed with breathtaking landscapes and unforgettable experiences, Iceland is the one for you.

The two most popular routes are the Golden Circle and the journey to Southern Iceland. The Golden Circle is a 300 km loop that takes you to some of the country’s most awe-inspiring sights, including geysers, waterfalls, and a national park. The route down to southern Iceland is great if you’re a fan of glaciers, black sand beaches, and a dramatic coastline.

best things to do in Iceland
A road trip is the best way to discover Iceland!

You might be thinking about taking a tour, but from my experience, nothing beats traveling at your own pace. It’s also the way to go if you want to save money, as tours in Iceland can be expensive.

So how do you find the perfect car? I’ve found the quickest and easiest way is to use Discover Cars. This will help you find the best match – whether you’re after the cheapest option, the most spacious car, or a specific brand.

Driving tips

Before you take off, there are a couple of things you need to keep in mind:

  • First, take it easy out there! The roads can be narrow, with one-lane bridges and gravel sections, so just relax and enjoy the scenery. It’s all part of the Icelandic experience.
  • Second, plan ahead! Some parts of Iceland can be pretty remote, so make sure you know where your next fuel stop is and always check for any road closures before you set off.

Learn more: You can read our car rental guide and Iceland driving tips to prepare for your trip.

Solo travelers

If you’re planning a trip to Iceland on your own, a tour may be the better option. A tour can be a great way to see the sights while making some new friends, but you gotta act fast! These tours fill up quickly, so make sure to book in advance if you want to secure your spot.

2. Go hiking

If you’re a nature lover planning a trip to Iceland, you’re in for a treat. The country is a hiker’s paradise, with stunning glaciers, sparkling waterfalls, and rugged landscapes just waiting to be explored.

Fjaðrárgljúfur Canyon Iceland

Where to go hiking in Iceland?

There are so many incredible places to explore on foot, but let me share a few of my favorites with you.

First up, I really enjoyed the hike to Glymur waterfall. This is Iceland’s second tallest waterfall, and it’s an absolute stunner. I spent half a day exploring the area and soaking up all its natural beauty.

I also loved the hike to Fjaðrárgljúfur Canyon, a breathtaking canyon in the South of Iceland.

For more experienced hikers, there’s the Thórsmörk trail. This challenging hike takes you through a valley surrounded by glaciers and peaks and is a must-do for any serious hiker.

3. See the Northern Lights

If you’re traveling to Iceland, you won’t want to miss the chance to see the northern lights. This natural phenomenon is simply magical, and Iceland is one of the best places in the world to see them.

The northern lights are caused by charged particles from the sun colliding with the earth’s atmosphere, creating a shimmering display of green, pink, and purple lights. The best time to see the northern lights in Iceland is during the winter months when the sky is dark and clear.

There are plenty of tour operators that offer northern lights tours, but if you’re feeling adventurous, you can also go out on your own. Just make sure to dress warm, find a dark location away from city lights, and keep an eye on the aurora forecast.

4. Watch the sunset at Seljalandsfoss waterfall

If you’re looking for a truly unforgettable experience in Iceland, make sure you catch the sunset at Seljalandsfoss waterfall. This stunning waterfall is located in the south of Iceland and is the perfect spot to watch the sun dip below the horizon.

The best part about Seljalandsfoss is that you can walk behind the waterfall and watch the sunset from there. It’s an absolutely incredible experience, and the combination of the waterfall and the warm colors of the sunset will take your breath away.

Just make sure to bring a waterproof jacket and some comfortable shoes, as the area can get pretty slippery. Oh, and don’t forget your camera! This is one sunset you’re going to want to remember forever.

Seljalandsfoss is one of the most beautiful waterfalls in Iceland.

5. See the abandoned plane wreck

Visiting the abandoned DC plane near the black sand beach of Sólheimasandur could be another addition to your packed Iceland travel list.

best things to do in Iceland

The story behind the plane wreck is pretty cool. It was a US Navy plane that crash-landed on the black sand beach back in 1973 and now serves as a popular tourist destination and a fascinating piece of history.

The best part? The hike to the wreck is an adventure in and of itself. On the three km walk, I passed through volcanic landscapes, crossed rivers, and walked on a seemingly endless black sand beach. All together, it took me three hours.

Iceland plane wreck travel.

6. Visit hot springs

Iceland is known for its geothermal activity, which means one thing: some of the most amazing hot springs in the world. If you’re looking to relax and rejuvenate after a long day of exploring, a hot spring might just be the best medicine.

One of the most famous hot springs in Iceland is the Blue Lagoon. This stunning geothermal spa is located in a lava field near Reykjavik, and its warm, mineral-rich waters are surrounded by breathtaking landscapes.

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If you’re traveling along the Golden Circle, you should also check out the Secret Lagoon. Created in 1891, this geothermal pool also has a small dining area and offers a great view of the Northern lights during the wintertime.

7. Explore the Glacier and Iceberg

The glaciers in Iceland are simply awe-inspiring! These massive rivers of ice are truly a sight to behold.

If you’re up for a bit of a challenge, you can take a guided hike onto the larger Vatnajökull glacier in the southeast. We decided to take our rental car to the easily accessible Sólheimajökull glacier in the south.

best things to do in Iceland

While there, it truly felt like I was in the Antarctic. I even got to hear the sound of an iceberg falling as it broke off from an ice shelf.

8. Visit a crater

Volcanoes are one of the most awe-inspiring natural wonders in the world, and Iceland is lucky enough to have some of the best ones!

If you’re on the Golden Circle route, you should stop by Kerið. This beautiful crater lake is located in the southwestern part of Iceland, and it’s one of the most popular tourist attractions in the area.

After a small entrance fee, I spent a couple of hours there soaking in the stunning views and learning about the history of this volcanic wonder.

best places to visit in Iceland
Vibrant blue waters, red volcanic rock formations, and lush greenery.

9. Walk along the black sand beach

The black sand beach near Vik, on the south coast of the island, is a sight to behold with its jet-black color, towering sea stacks, and powerful waves.

The black sand originated from the basalt lava covering much of the area. It’s popular to make little stacks using the smooth rocks on the beach.

It’s a great place to stop for a bit of rest and relaxation during your travels.

best places to visit in Iceland Vik
I took one of the rocks back as a souvenir.

10. Try Icelandic food

You’ll find that restaurants in Iceland can be a bit pricey. However, one of the best parts about traveling is trying new and delicious food, and Iceland is no exception!

You should at least try some of the Icelandic specialties such as fermented shark or hákarl, which is an acquired taste, and skyr, a creamy yogurt-like dairy product.

Don’t be afraid to step out of your comfort zone and try something new – you just might discover your new favorite food!

places to eat in Reykjavik

11. Observe the midnight sun

If you’re visiting Iceland during the summer months, you’ll have the unique opportunity to experience the Midnight Sun! This natural phenomenon occurs when the sun stays above the horizon for 24 hours, creating a never-ending day.

I visited Iceland in May, and the day was long. At 10 pm, the sky was still bright and clear, looking like it was still around late afternoon – adding a whole new level of magic to my travels.

It’s even brighter from June to August – the bright sun can be intense even in the middle of the night! Make sure to pack a good pair of sunglasses!

12. Play with Icelandic ponies

One of the most charming creatures you’ll encounter during your travels in Iceland is the Icelandic ponies! These cute and quirky horses are a staple of the Icelandic countryside and are known for their shaggy manes, sturdy builds, and gentle personalities.

Several horse farms offer riding tours, but you’ll have the chance to meet plenty of these little ponies on an Icelandic road trip.

best things to do in Iceland riding horses

13. Find puffins

Puffins are one of the most charming creatures you’ll find in Iceland. With their adorable colorful beaks and playful personalities, these little birds are sure to steal your heart.

They’re easier to find from the middle of April to mid-August, so pack your binoculars. If you’re really keen, you can even get up close and personal on a puffin-watching tour.


14. Share a trip

Renting a car in Iceland is a popular choice for many tourists, and it’s a great way to save money on transportation costs. To maximize your savings, consider sharing the cost with other travelers.

There are plenty of travel groups on social networks that are always looking for fellow road-trippers to join forces with. By pooling your funds, you can split the cost of the rental and save a lot of money. Plus, you’ll get to enjoy the journey with some new friends! It’s a win-win situation.

car rental Iceland.

15. Camp in Iceland

Camping is a fantastic way to experience the beauty and wilderness of Iceland, while also saving money on accommodation. The country offers a vast number of campsites and natural spaces where you can pitch your tent and enjoy the great outdoors.

During my road trip to Iceland, I chose to sleep in the car we rented together. This was a little uncomfortable, so I recommend camping as the better option.

Make sure you have the necessary camping equipment, such as a tent, sleeping bag, and camping stove. And, always remember to follow Leave No Trace principles, so you can help preserve Iceland’s natural beauty for generations to come.

16. Visit the capital

So, while Iceland’s natural beauty is a major draw, don’t overlook the capital city of Reykjavík. It’s packed with personality and tons of things to see and do.

best things to do in Iceland

One of the best things about Reykjavík is that there are plenty of free activities to enjoy. Take a leisurely stroll along the river, chill in one of the city’s many parks, or peruse the market for unique finds. Another must-do is to walk down Laugavegur, the main shopping street, and check out the trendy boutiques, vintage shops, and street food stalls. Or, get a taste of Reykjavík’s art scene by visiting its numerous galleries and museums.

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Iceland travel guide

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  1. Clarice Lao says:

    This is very timely as I am making our itinerary for Iceland late this year. Can’t wait to see the Northern lights. I have always dreamed of seeing it my entire life.

    1. Great to know that you’re going to see the Northern lights in Iceland. It will be awesome!

  2. This is so great, I’ve always put off going to Iceland on the basis that it’s so expensive but this sounds like I could achieve it on a budget! P.s. your pictures are beautiful!

  3. Love this post! It’s been nearly a couple of years that I’ve been wanting to go to Iceland but it hasn’t happened yet :-/

  4. Iceland is so amazing. I am planning to visit someday ..hopefully will get a chance soon.things to do you mentioned are so tempting. Loved all the pics

  5. I’ve been wanting to visit Iceland for a while but haven’t had chance yet! I’ll Definitely keep this list handy for when I eventually get chance to visit

  6. Matthias Last says:

    Let’s face it, Iceland isn’t the most budget-friendly of destinations so anyone looking to go there who’s sort of a penny pincher would definitely enjoy this article! The Northern Lights look beautiful and it’s usually one of the main reasons people would want to visit Iceland. Great tips and anything that’s free but in a new destination is definitely worth the shot.

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