11-Day Ultimate Budget Backpacking Route in Iceland
Iceland is often seen as a playground for the wealthy, but for the savvy backpacker, it offers some of the world's most dramatic landscapes for the cost of a bus ticket and a grocery run. By leveraging the Strætó public bus system and the extensive network of high-quality hostels, you can witness towering waterfalls and volcanic deserts while keeping your daily spend around $55.
This itinerary takes you through the classic Ring Road stops and hidden gems of the North, prioritizing free natural attractions like hot springs and national parks. Prepare to cook your own meals from Bónus supermarkets and embrace the communal spirit of Icelandic hostel life.
Day 1: Reykjavik, Iceland - Arrival & City Essentials
Arrival at Keflavik International Airport
Land and take the efficient Flybus to the city center. This is the most cost-effective way to reach Reykjavik compared to private taxis.
Check into Kex Hostel
Drop your bags at this trendy former biscuit factory. It’s the social hub of Reykjavik, offering affordable dorms and a great kitchen for meal prep.
Hallgrimskirkja & The Sun Voyager
Visit the iconic concrete church and the nearby steel sculpture for free. The architecture reflects the basalt columns found in Icelandic nature.
Grocery Run at Bónus
Head to the 'pink pig' supermarket to stock up on essentials like Skyr, pasta, and bread to avoid expensive restaurant prices.
Day 2: Reykjavik, Iceland - The Golden Circle on a Budget
Þingvellir National Park
Take the bus or a budget shuttle to this UNESCO site where the tectonic plates pull apart. Entrance to the park grounds is free.
Geysir Geothermal Area
Witness Strokkur erupt every few minutes. It is a completely free natural spectacle that requires no ticket.
Gullfoss Waterfall
Marvel at the 'Golden Falls' where the Hvítá river plunges into a deep canyon. The viewing platforms offer incredible photo ops for $0.
Laugardalslaug Swimming Pool
Skip the expensive Blue Lagoon. Do as the locals do and visit this public pool for under $10 to soak in the geothermal hot tubs.
Day 3: Hella/Skógar, Iceland - South Coast Waterfalls
Bus 51 to Seljalandsfoss
Use the Strætó intercity bus to head south. This famous waterfall allows you to walk behind the cascading curtain of water.
Gljúfrabúi Hidden Falls
Located just a short walk from Seljalandsfoss, this waterfall is tucked inside a cave. It’s a free, mist-filled adventure.
Skógafoss Hike
Continue to Skógar. Climb the 527 steps to the top for a view of the coastline, then start the 'Waterfall Way' trail along the river.
Skógar HI Hostel
Stay overnight at the local HI Hostel. Cooking here while watching the sunset over the falls is a priceless experience.
Day 4: Vík, Iceland - Black Sand & Basalt Columns
Reynisfjara Beach
Explore the world-famous black sand beach. The basalt columns and sea stacks are completely free to visit; just watch out for sneaker waves.
Vík i Mýrdal Church
Walk up the hill to the white-and-red church for the best panoramic view of the village and the Reynisdrangar stacks.
Dyrhólaey Promontory
Catch a ride or hike to this archway. During summer, this is one of the best free places to spot puffins nesting in the cliffs.
Local Food: The Soup Company
Treat yourself to a bowl of Red Lava soup—it’s one of the more affordable dining options in Vík with free refills.
Day 5: Skaftafell, Iceland - Glacier Hiking Trails
Vatnajökull National Park Entry
Take the morning bus to Skaftafell. The park offers numerous free hiking trails ranging from easy to challenging.
Svartifoss Waterfall Hike
A 1.5-hour round trip hike leads to this waterfall framed by hanging hexagonal basalt columns. It inspired the architecture of Hallgrimskirkja.
Skaftafellsjökull Glacier View
Follow the flat 2km path to the base of the glacier tongue. You can touch the ice and see the blue crevasses without paying for a tour.
Skaftafell Campground/Pod
Accommodation is limited here, so stay in a budget pod or the well-equipped campground to stay close to the trails.
Day 6: Jökulsárlón, Iceland - The Iceberg Lagoon
Jökulsárlón Glacier Lagoon
Watch massive icebergs drift from the glacier toward the sea. It is a stunning, free natural gallery of shifting ice.
Diamond Beach
Cross the road to see the ice chunks washed up on the black sand like diamonds. This is one of the most photographed spots in Iceland.
Bus to Höfn
Head to the fishing village of Höfn. This town is famous for langoustine, but you can find affordable options at the local gas station diner.
Höfn Harbour Walk
Stroll the docks as the fishing boats come in. On a clear day, you can see the Vatnajökull ice cap towering in the distance.
Day 7: Egilsstaðir, Iceland - The Eastfjords Transit
Eastfjords Scenic Bus Ride
Today is a long travel day through the fjords. The public bus route itself is a tour, winding through steep mountains and tiny villages.
Djúpivogur Pitstop
The bus usually stops here. Check out the 'Eggs of Merry Bay'—a free outdoor art installation representing the local bird species.
Egilsstaðir Arrival
The hub of the east. Check into your hostel and visit the local Bónus to replenish your food supplies for the northern leg.
Lagarfljót Lake
Take a walk by the lake, home to the 'Icelandic Loch Ness.' The walking paths through the Hallormsstaðaskógur forest are free and peaceful.
Day 8: Akureyri, Iceland - Capital of the North
Bus to Akureyri
Cross the highland plateaus on the way to Iceland's second-largest city. Keep an eye out for Icelandic horses along the road.
Akureyri Botanical Garden
One of the northernmost botanical gardens in the world. It’s free to enter and offers a surprisingly lush escape.
Akureyrarkirkja
Visit the sister church to Hallgrimskirkja. Its position on the hill provides a great view of the Eyjafjörður fjord.
Akureyri Backpackers
Check into this legendary hostel on the main street. It has a great bar and is the best place to meet fellow travelers.
Day 9: Mývatn, Iceland - Geothermal Wonders
Goðafoss Waterfall
Take the bus toward Mývatn. Stop at the 'Waterfall of the Gods,' where Iceland's conversion to Christianity was finalized.
Hverir Mud Pools
Explore this orange, smoking landscape of boiling mud and steaming vents. It feels like walking on Mars and costs nothing to visit.
Dimmuborgir Lava Formations
Walk through these 'Dark Castles'—massive lava tubes and crags that resemble a gothic city. Multiple trails are available for free.
Grjótagjá Cave
Visit the famous lava cave used as a filming location for Game of Thrones. While you can't swim anymore, the blue water is stunning.
Day 10: Borgarnes, Iceland - The Western Gateway
The Long Westward Trek
Use the intercity bus to head from the North toward Borgarnes. This route covers vast lava fields and coastal views.
The Settlement Centre (Exterior)
Walk around this historic area in Borgarnes. The town is rich in Saga history and offers great coastal walking paths.
Borgarfjörður Views
Walk to the top of the local hills for a view of the mountains and the sea. It’s a perfect spot for reflection on your nearly completed circuit.
Borgarnes HI Hostel
A quiet, clean hostel that serves as the perfect final stop before heading back to the capital.
Day 11: Reykjavik, Iceland - Final Stroll & Departure
Return to Reykjavik
Take the final bus leg back to the city. Spend your remaining Icelandic Króna on a famous Bæjarins Beztu Pylsur hot dog.
Harpa Concert Hall
Explore the stunning glass architecture of Harpa. Walking through the public areas and the gift shop is a free cultural experience.
Reykjavik Old Harbour
Enjoy the sea breeze and look at the colorful fishing boats. This is a great spot for window shopping and soaking in the final vibes.
Flybus to Keflavik
Catch your pre-booked shuttle back to the airport for your flight home.
Best Time to Visit Iceland
The best time for this budget backpacking trip is between June and August. During these months, the Strætó intercity buses run at full frequency, and the 'Midnight Sun' provides nearly 24 hours of daylight, allowing you to maximize your sightseeing time. If you want to see the Northern Lights, aim for late September or March, though be prepared for more limited bus schedules and colder camping/hostel conditions.
Currency & Money
The local currency is the Icelandic Króna (ISK). Iceland is one of the most card-friendly countries in the world; you can pay for even a single hot dog or a bus ride with a contactless credit card or phone. Tipping is not expected and service is included in the price. To save money, always select 'Pay in Local Currency' when using ATMs or card machines.
Getting Around Iceland
Public transport is handled by Strætó, which connects major towns along the Ring Road. While efficient, it requires careful planning as buses between distant towns may only run once a day. For those on a budget, downloading the Strætó app is essential for tickets and schedules. Alternatively, many backpackers successfully use carpooling sites like Samferda.is to share fuel costs with locals and other travelers.
