Reykjavik on a budget

Me enjoying a cinnamon roll from my favorite bakery (Brauð and Co.) in front of Hallgrímskirkja

Back in September I was coming down off my trip high from 2 months in Europe and wanted to spend the New Year in a new place. So, I used my miles and booked a 2 week trip to Iceland. After the fact it hit me that: 1) I had just come back from a 2 month trip and had little money and 2) that I had just booked a trip to a notoriously expensive place. So here are a few things we did to try and keep the cost down and also a few mistakes (because what adventure doesn’t have a few of those).

Cash or Credit

The Christmas Cat in Reykjavik. If you’re visiting during Christmas time read up on the Icelandic Yule Lads! I found them really fascinating and will probably have a future post about Christmas in Iceland

First off, dont bother taking out cash. Even our free tour had a card reader for tips. When I initially asked for an ATM I was given a weird look and asked why I would even need one. If you have a credit card with no international fees, you can save yourself some money by avoiding atm and currency exchange fees.

Car Rental and Parking

One tiny car, three people, three suitcases, three backpacks, and countless miscellaneous things.

This is the first trip where I’ve rented a car. We wanted to have the freedom to move around as much as we wanted and to not be constrained to bus tours outside of Reykjavik. Originally, I was going to try and take public transportation, but after reading many other advice sites it sounded like the rental car would be best in the end.

Our first obstacle was that our apartment in downtown Reykjavik didnt have parking. However, I was able to use this helpful guide, which has a map that I pulled up in google maps and made sure we stayed outside of the pay zones. Using this guide, it was rather easy to avoid paying steep downtown prices if we were willing to walk 5-7 minutes to our apartment. The areas we parked were nearer residential areas and we saw no signs to initiate we couldn’t park there overnight.

The negative with car rental, however, was that the insurance on the car itself was far more than we had wanted to pay. We thought maybe our insurance would cover it based on what I was reading about third party insurance (first time renters out of the USA), but apparently we needed coverage for sand and gravel damage and other damages that may happen to the car. So our budget was already threatened with that. At the end of the day I took it as a learning opportunity. From my research, it is a good idea to get at least sand and gravel protection if you will be along the South Coast, but I think everything else is up to how comfortable you are with being reliable for damages.

Attempting to Eat Cheap

Iceland Costco, opened in 2017

The toughest thing for us was finding cheap food. We went to the discount grocery stores, Bonus and Krónon, and stopped by Costco to buy cheap snacks for the road and between meals. Your foreign Costco membership works! We just had to get an override. The food there was probably the cheapest meal we’ve had the entire time in Iceland. We made sure to bring an insulated grocery bag for cold items. The next time I visit Iceland I will make sure to leave time to plan a few go-to recipes for easy meals to avoid most of the expensive restaurants.

For breakfast, I loved Brauð and Company. A great bakery where I’d get pretzels to snack on and cinnamon rolls for breakfast.

Brauð and Company, great pretzels and atmosphere!

When we did eat out, the cheap places we found were mostly Bæjarins Beztu Pylsur and Noodle Station. Though a few places had lunch specials that lowered the price they were still $20-30. My favorite place I ate at in Reykjavik was Icelandic Street Food. I still spent a little over $15, but it came with free refills on soup and free dessert like spiced cake and brownies so I felt like I really got your money’s worth. Plus, if there is no seating inside, you can take your food to the bar next door to eat and still come back for refills.

Some of the soup from Icelandic Street Food

Another tip to save money is don’t buy bottled water! The tap water is delicious and restaurants will give you as much water as you want for free. We brought instant hot chocolate and coffee from home so we wouldn’t buy too many hot drinks. If you’re wanting to sample Icelandic alcohol, however, it is expensive. Despite pictures online Costco does not sell alcohol. If you want to have alcohol while here go to the duty free store before exiting the airport for the cheapest possible. If not, you will have to buy individual drinks from restaurants or buy from the Vínbúđin which are both extremely expensive. If you dont mind spending the money, an espresso martini was labeled “better than sex” by our waiter in Reykjavik.

Picture of the espresso martini

Souvenir Shopping

Entrance to Kolaportið

I honestly didnt find much I wanted to buy in Reykjavik. I typically like locally made stuff for myself and souvenirs. The main shopping street, Laugavegur, had a lot of interesting stores, but I didnt find anything I was willing to spend money on. It wasn’t until our last day as we waited out the weather warning that I convinced our group to head to the indoor flea market, Kolaportið (only open on Saturdays and Sundays). It is called a flea market, but has a mix of second hand and locally made items with a cafe. There, we found lots of great booths and I ended up getting a locally made lopapeysa (Icelandic sweater) for about half the price it would be in the stores around the main shopping area and did 90% of my souvenir shopping. I loved it! Lots of local vendors and artists.

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