The Harry Potter series captures the imaginations of both children and adults from all over the world, and it is going to continue to be a classic for future generations. If you're a fan of Harry Potter, some of you may have wondered: If Wizards have magic powers, why can't they just create money out of thin air?

How does money work in the world of Harry Potter?

Wizard Currency

Gringotts Bank
Craig Russell/Shutterstock
Dragon protecting the gold under Gringotts Bank

JK Rowling purposely wrote a rule in her books that only the Philosopher's Stone can create gold. This is based on the old legend of Alchemists who could turn lead into gold and become immortal with the power of the Philosopher's Stone. (In the U.S. version, the name was changed to 'Sorcerer's Stone'). Straight away, we know that even for wizards, money doesn't grow on trees. There is even counterfeit money called Leprechaun Gold that seems totally legitimate, until it vanishes within a matter of hours.

The metal coins used by wizards are bronze Knuts, silver Sickles, and gold Galleons. There are no paper dollars here — everything in the wizarding world is made from precious metals. In the books, we are told that one Galleon is equal to 493 Knuts, or 17 Sickles.

One of the greatest achievements of the Wizarding world is that every single wizard uses this currency, no matter what country they visit. Since the money is based on precious metals, there is no confusion about value, and no exchange rate to worry about. Not only does their monetary system make life more convenient for traveling than Muggle money, their system also prevents inflation. If there is only a set amount of coins that exist in the world, which means that the value continues to be stable. An economy like this is necessary if they want to to last hundreds of years for generations of wizards, and it has.

So — that's all well and good, but maybe you are also wondering — could you afford to live in the Wizarding world? According to the Harry Potter Wiki, one Galleon is equivalent to roughly 5 British Pounds, or 6 U.S. Dollars. When Harry gets all of his fancy brooms to fly on, we can only speculate that they cost nearly as much as a car. A butterbeer is roughly $3 USD, which seems pretty reasonable. JK Rowling's attention to detail is astonishing in this way. The prices she gives on items in the books are basically the same as the cost of living in the real-life United Kingdom.

Continued on NEXT page...