Iceland: How to holiday in Europe’s second most expensive country on a budget – with kids

When torrential rain and hailstorms hit a holiday, especially one with kids, it usually leads to a giant, disappointing wash-out. But in Iceland, with my six-year-old son, it only added to the drama of visiting this volatile, volcanic island.

“Look, I can catch the raindrops in my mouth!” he shrieked with joy. For the record, we were completely soaked anyway – we were floating, goggles on, in the black lava geothermal pool at Laugarvatn Fontana Spa that’s heated naturally underground to a very toasty 38°C.

It didn’t matter that we were being pelted with frosty droplets when our bodies were so warm in the “hot pot” (as locals call hot springs). It was an exhilarating, sensory experience, and perfectly encapsulated why Iceland is known as the land of fire and ice.

This isn’t just a bucket-list destination for some of the 1.7 million adults who visit each year, but with its volcanoes, Viking history, and wildlife, it’s a dream holiday for many children too. But with a notoriously high cost of living (the second-highest in Europe, according to cost of living database Numbeo), I wondered whether there was any way to visit on a modest budget.

Surprisingly, the answer was yes – not least because admission to most attractions is free for children aged six and under. Arriving in on efficient, no-frills flights with new Icelandic carrier Play (from £80 return), we saved more of our krona by getting the hour-long number 55 bus from Keflavik airport for £13 each way, rather than the tourist buses, which cost from £25 upwards.

Laura and her son at Fontana geothermal baths (Photo: Supplied)
Laura and her son at Fontana geothermal baths (Photo: Supplied)

Arriving in Reykjavik, we checked into the Exeter Hotel, where we were based for our three-night stay. As we walked through the door, blown in by the howling high winds and rain, we laughed as the receptionist greeted us with typically black humour: “Welcome to an Icelandic summer!”

A modern and stylish hotel right next to the city’s harbour, the Exeter has double rooms from £152 a night, and while this might not be bargain-basement cheap, the rates include a treat-laden breakfast.

“Can I really have doughnuts for breakfast?” my son asked incredulously on the first morning, “Sure”, was my response – by making breakfast the biggest meal of the day, it meant we could have a light lunch such as the instant noodles, cereal bars, crisps and fruit that I’d brought with us from the UK.

This saved our money for dinner; one night, we shared a big bowl of chicken ramen at Ramen Momo (£17), another, burgers at Le Kock (£14). Most average-priced restaurants were comparable in costs to London.

The continental divide in Thingvellir National Park (Photo: Mlenny/Getty Images)
The continental divide in Thingvellir National Park (Photo: Mlenny/Getty Images)

A non-negotiable expense was a tour of the Golden Circle – the 190-mile route of Iceland’s natural highlights: Thingvellir National Park, Geysir geothermal area and Gullfoss waterfall. With local tour operator Grayline, the cheapest day trip starts at £62, but happily, my son went free.

Our guide, Sven, was knowledgeable and funny, but as it was a nine-hour coach trip, I decided to spend an extra £25 on a tour that would break the day up at the Laugarvatn Fontana Spa. It turned out to be a highlight and money well spent. It’s also half the price of the oversubscribed Blue Lagoon.

The rest of the day was spent travelling from one incredible location to another. We grabbed hold of each other tightly as the winds whipped up around the sheer drop of the phenomenal Gullfoss waterfall; peered into the awe-inspiring crevices and abyss of the Thingvellir national park tectonic plates (splitting Iceland in half by two centimetres a year, geology fans), and in a happy accident, my son managed to capture on camera the exact moment a giant geyser exploded in Haukadalur.

Laura and her son at Gulfoss waterfall (Photo: Supplied)
Laura and her son at Gulfoss waterfall (Photo: Supplied)

While we were in Reykjavik, I bought a city card (£26 for 24 hours), which saved us about £100 since bus fares are included (normally £3.50 per journey), as well as admission to 15 museums and galleries (adults typically pay from £10 a ticket), with no limit to how many you visit.

Iceland has a thriving art and music scene, and after learning about the history of Vikings and Icelanders at the Árbær Open Air museum, we enjoyed the weird and wonderful contemporary artworks at Kjarvalsstaðir gallery, which has the bonus of one of the only playgrounds in the city in the park next to it.

There was more free fun posing for pictures on Rainbow Street downtown (the road was painted for Pride in 2015) after which I spent £4 on an award-winning vanilla swirl from Brauð & Co bakery which was big enough to share. The city’s Park and Zoo is good value (again, children under six go free, adults are £10, but it’s included with the City Card) with funfair rides alongside the animals – which include arctic foxes, Icelandic horses, reindeer and seals – and electric grills that are free to use, meaning you can bring hot dogs to cook for lunch.

Laura's son on Rainbow Street (Photo: Laura Martin)
Laura’s son on Rainbow Street (Photo: Laura Martin)

We had hoped to go on a whale watching boat tour, but bad weather cancelled it; such is the unpredictable nature of life in Iceland. However, the moody skies cleared as we arrived at Sundhöll, Reykjavik’s 86-year-old Art Deco swimming pool. With the city pass we strolled in for free (adults normally £7) although under-16s can swim here for free regardless and my son splashed about in the late afternoon sun with some local kids and more toys and floats in the five outdoor hot tubs than you could shake a pool noodle at.

Naturally, we couldn’t leave without seeing one of Iceland’s 32 active volcanoes – in the past two years there has been more activity than usual, with an eruption roughly once every 12 months. South of the capital, Litli-Hrutur was simmering down but still chugging out toxic gas, so we were advised to avoid visiting. Instead, to explore the fiery belly of the earth, we went to the Lava Show (adults £34; children two to 12 £20), an impressive and theatrical demonstration using real, red-hot 1,100°C molten lava. My son leapt out of his chair in excitement and was given some blackened, solidified lava to take home for school show-and-tell.

Ice cream at OmNom in Reyjkjavik (Photo: Laura Martin)
Ice cream at OmNom in Reyjkjavik (Photo: Laura Martin)

Our final visit was a chocolatier and ice cream shop we’d seen on TikTok: Omnom, “the northernmost chocolate factory” where we tucked into deliciously sweet soft-serve, piled high with honey nut cornflakes and chunks of chocolate (sundaes from £4).

It was an indulgent end to a thrilling, four-day trip that had cost a total of £800 for the two of us – around the same price as a peak-time short break to Center Parcs in the UK, but one that neither of us will ever forget.

For more information: visitreykjavik.is