5 Financial Literacy Lessons From ‘Harry Potter'

Forbes

5 days ago

Actors, Daniel Radcliffe, (L) Emma Watson (M) and Rupert Grant (R) on the set of the film, 'Harry ... More Potter and The Goblet of Fire', London, England, 2005 (Photo by Murray Close/ Getty Images)
With the HBO Max reboot of Harry Potter slated for release in 2026 and the recent announcement of key cast members including the new Harry, Ron, and Hermione, it's the perfect moment to return to the Wizarding World—not for nostalgia, but for wisdom. Beyond the magic, J.K. Rowling's classic series is rich with useful insights, including potential lessons in financial literacy. Though Galleons, Sickles, and Knuts may not appear in your bank statements, the characters and their stories mirror those in the Muggle world. Here are five financial literacy lessons inspired by Harry Potter.
In Harry's world as in personal finance, acting on misinformation can be catastrophic. For example, Lord Voldemort misinterpreted the prophecy and acted on incomplete information passed on by Severus Snape. He targeted Harry without knowing that he risks marking Harry as his equal and passing to him 'powers that the Dark Lord knows not.' That error set in motion his first downfall at the beginning of the series. It also remained his main motivation to hunt Harry throughout the novels, which led to Voldemort's defeat in the end.
Dumbledore, by contrast, took years to gather intelligence, understand Voldemort, and strategically prepare Harry to destroy the Horcruxes. He exemplified what might be called due diligence.
This highlights the importance of financial literacy and keeping up with relevant information. The foundation of wise financial decision-making is in acquiring accurate, up-to-date information. There are a lot of resources available to increase your knowledge base. You can read books and articles from reputable websites and blogs, attend workshops or seminars, and follow trusted advisors and other financial professionals. Never base major financial decisions on rumors, trends, or partial data.
Albus Dumbledore was the ultimate long-term strategist. From the moment he left The-Boy-Who-Lived at the Dursleys' doorstep, his decisions were guided by his dual goal of protecting Harry and killing Voldemort. Though Dumbledore himself admitted to making mistakes in regard to Harry (especially in Order of the Phoenix), his planning yielded fruit in the end.
Thinking long-term is equally critical in personal finance. For example, when investing, having a long-term perspective allows you to withstand short-term fluctuations and avoid the perils of timing the market. In terms of savings, a long-term outlook lets you maximize compounding. The earlier you save, the more interest your money will earn in time. You can also apply this to goal setting. Planning for a child's college education, a home purchase, or your retirement requires patience, discipline, and resilience.
Financial goals are rarely achieved overnight but the earlier you start, the better. And like Dumbledore, you should trust in the long game.
No one is immune to deception. For instance, in Goblet of Fire, Harry spends an entire year under the mentorship of who he believes is Professor Alastor Moody—only to discover that it was actually Barty Crouch Jr., a Death Eater using Polyjuice Potion. Similarly, in Sorcerer's Stone, Harry suspects Snape of trying to steal the stone. Then it was revealed in the end that it was 'p-p-poor, st-stuttering' Professor Quirrell who posed the real threat (with Voldemort in the back of his head, to boot!)
In the real world, financial scams are often disguised as friendly advisors or trustworthy emails. Beware of phishing, identity theft, Ponzi schemes, and get-rich-quick investment opportunities. It is critical to learn how to identify red flags, verify identities, and protect your personal information.
Use two-factor authentication whenever available. You should also check and monitor your accounts regularly for suspicious activities and report them as soon as possible. Never share crucial personal information online and be careful about anything you post even in social media. Live by the mantra, 'If it's too good to be true, it probably isn't' and as Moody will remind you, 'Constant vigilance!'
James and Lily Potter may have perished early, but they left Harry with the magic of love that protected him from Voldemort throughout, not to mention the vault full of gold at the wizard bank, Gringotts. ('Didn't think yer mum and dad will leave you with nothing now, did yeh?' said Hagrid in Sorcerer's Stone.) That and an additional inheritance from Sirius later in the books, sustained Harry's Hogwarts education and beyond. Thankfully, they had.
You should follow this example and plan your estate as early as possible. It's also important to understand that estate planning is not only for the wealthy—it is for anyone who wants to ensure their loved ones are taken care of and their wishes respected. As soon as you are 18, and especially if you have any earned income, it's advisable to start estate planning.
Regardless of the amount of assets you have, prepare for the possibility of death. Even a simple will can ensure that you leave specific instructions as to how your estate will be managed. Later, as your assets become more substantial, you can set up trusts, durable power of attorney, healthcare proxies, advanced directives, and beneficiary designations, as needed.
While it is possible to do it yourself, it's better to have support and guidance from friends, family, or professional advisors when managing or planning your finances. After all, Harry's victories were never achieved alone. He had help from Ron and Hermione for most of his adventures. Dumbledore, Lupin, Sirius, and the other members of Order of the Phoenix and Dumbledore's Army also played indispensable roles in the defeat of Voldemort.
In your financial journey, you should also surround yourself with trustworthy allies. For example, your friends and family can be accountability partners as you work to get out of debt, build your emergency fund, or develop your savings habit. They can also provide moral and sometimes even financial support. There may also come a time when you will need professional advice. Whether it's a certified financial planner, a tax advisor, an investment broker, or an estate attorney, professional guidance can help you with tailored strategies especially as your finances become more complicated.
Just remember to do your due diligence when choosing advisors. You never know when your most trusted advisor is your worst enemy (as it turned out Snape was to Voldemort). While you may not be able to use Legilimency and read people's minds, you can use tools like FINRA's BrokerCheck or the SEC's Investment Adviser Public Disclosure website to conduct background checks.
As the world awaits the Harry Potter reboot, revisiting the series though a financial lens reveals useful insights. From ensuring accurate information and thinking long-term to being aware of scams and seeking help from others, the characters and stories from the Wizarding World not only entertain but can also help teach financial literacy.