Q. We want to plan a holiday for this summer somewhere that won't cost a fortune (and isn't tied to the dollar or the euro) but that still offers a bit of an escape. There are four of us, including two teenagers, and our budget will stretch to around £3,500 for a week for the four of us. Which destinations do you suggest? D Hill, via email

A. Iceland may well be your answer. The economic downturn might have snipped your holiday budget, but with sterling buying you on average 50 more Icelandic kronur compared with this time last year, the Nordic island is one destination where your pound will now get you further than the days of a £5 coffee or £7 beer.

Original Travel (020-7978 7333; originaltravel.co.uk) can put together a tailor-made trip from £3,500 for the four of you, which includes Icelandair flights from Heathrow, seven nights in Reykjavik, car hire, a whale-watching trip and some glacier snowmobiling.

Despite Iceland's proximity – around three hours' flight from London – you'll feel a lot further away from the daily grind in the world's northernmost capital. Combining all the facets of a modern capital city with mountain scenery, ocean views and steaming geothermal vents, Reykjavik retains a tangible connection with nature that has remained since it was first settled in the ninth century.

Accommodation is in downtown Reykjavik at Holl Cottage, a 19th-century cottage complete with wood-burning stoves, pine floorboards and a mix of antique and modern furnishings. It is within walking distance of the town centre and harbour, where the half-day whale-watching trip departs from, with the opportunity of spotting minke whales, orcas, humpbacks and dolphins.

Once you've explored the attractive capital, venture out to wallow in the geothermal waters of the Blue Lagoon (00 354 420 8800; bluelagoon. com). Around 40km from Reykjavik, the lagoon's 38C milky-blue water has reputed health benefits, but the unique setting is an appeal in itself. Admission is 2,400ISK (£14.60) per person.

In stark contrast to the temperate waters of the Blue Lagoon are the icy landscapes of Iceland's glaciers. There are a handful within a few hours' drive of Reykjavik, which provide a playground for year-round snowmobiling. Guides will decide where the conditions are best when you arrive, so you could be skirting across the volcanic Snaefellsjokull, described in Jules Verne's Journey to the Centre of the Earth, or Vatnajokull, Europe's largest glacier by volume.

Similar self-guided holidays are offered by Discover the World (01737 218 800; discover-the-world.co.uk), which can put together a seven-night self-drive trip to Iceland from £2,820 for the four of you. The price for the Southern Highlights trip includes flights from Gatwick to Reykjavik, seven nights' self-catered accommodation and car hire, as well as white-water rafting, horse riding and snowmobiling trips.

For more information on Iceland's attractions, visit the tourist board's website, icetourist.is.

Sweden could be another contender for your holiday. Although the exchange rate may not be such a bargain (Skr12/£1 compared with Skr12.90/£1 last year), the Swedish economy shares Iceland's freedom from the volatile euro.

With its timeless, craggy shoreline and thousands of offshore islands, the west coast offers a gorgeous backdrop for a family break. Gothenburg is less than two hours' flight from the UK and is served by Ryanair (0871 246 0000; ryanair.com) from Stansted and Glasgow.

Since the focus here is the coast, an excellent way to cram in as much as possible whilst still having time to soak up the scenery is on water. You could explore the Bohuslan coast, north of Gothenburg, on a skippered yacht. The busy fishing villages and peaceful islands, coupled with long summer days, make for an idyllic escape. Gothenburg-based Sjosportskolan (00 46 312 920 30; sjosportskolan.se) offers a skippered, six-berth Orion 12 yacht from Skr24,380 (£2,024) per week. The crew can guide you to the quieter islands and harbours along the coast, stopping off to buy fresh seafood to cook on board or to swim in a sheltered cove.

As you wend your way north up the shoreline, you'll pass the 19th-century Vinga lighthouse and through an ever-changing passage of islands including Vargo, Kladesholmen and Karin-gon. Kladesholmen is home to one of the region's best fish restaurants, Salt and Sill (00 46 304 673 480; saltosill.se), which has recently opened a stylish floating hotel (doubles Skr1,190/£99). If you stop only for something to eat, try the signature herring platter.

By contrast, Marstrand is the jet-set destination for weekending yachties. Graceful wooden buildings line the lively harbour of this former spa town, which also serves as a stop-off point on the Volvo Ocean Race on 10 June (volvooceanrace.org).

Even on a tight budget, it is a great place to shore up, if only to people-watch. The town's centrepiece is Carlstens Fastning (00 46 303 602 65; carlsten. se), a 17th-century stone fortress at the island's highest point. It is open daily 11am-6pm (until 4pm from 11-31 August), entrance Skr70 (£5.80) or Skr25 (£2.10) for seven- to 15-year-olds. For more information on Sweden's west coast, visit westsweden.se.

Send your family travel queries to The Independent Parent, Travel Desk, The Independent, Independent House, 191 Marsh Wall, London E14 9RS, or email crusoe@independent.co.uk