Quick answer: Reykjavik runs about EUR 190 per day mid-range - noticeably less if you eat local and walk. Cheapest window: June-August for midnight sun and easiest driving, September-March for northern lights - shoulder months May and September balance both.
What things actually cost
cappuccino in a cafe
5 EUR
draft beer (0.5l) in a bar
9-10 EUR
hot dog with everything
5 EUR
local swimming pool entry
9 EUR
Sky Lagoon basic entry
60-70 EUR
mid-range dinner main
28-40 EUR
Eat well for little
Hot dog at Baejarins Beztu Pylsur - the famous stand near the harbour, order one with everything for about 5 EUR
Lamb soup (kjotsupa) - hearty and everywhere in winter, about 18-22 EUR a bowl
Plokkfiskur - creamy mashed fish and potato comfort food, around 22-28 EUR in a mid-range restaurant
Fish and chips at the Old Harbour - fresh cod or haddock, about 20-25 EUR
Skyr from any supermarket - thick Icelandic dairy, a 1-2 EUR high-protein breakfast that saves real money
Money mistakes to avoid
Buying bottled water - Icelandic tap water is excellent, carry a bottle and refill everywhere
Booking Blue Lagoon or Sky Lagoon on arrival day without checking flight times - slots sell out and tickets are date-fixed, book online days ahead
Underestimating weather changes - pack a waterproof shell and layers even in July, tours run in rain and wind
Doing all drinking in bars - alcohol is heavily taxed, buy at the airport duty-free on arrival like locals do and use happy hours (many bars post them in the Appy Hour app)
Transport without the tourist tax
Keflavik airport is 50 minutes from the city - the Flybus or Airport Direct shuttle costs about 25-32 EUR each way, versus roughly 130-160 EUR for a taxi. The center is easily walkable, and yellow Straeto city buses cost about 4 EUR per ride; rent a car only for the days you leave the city.