There are three types of in-game currency, some of which you can build up by collecting taxes or unlocking achievements. Unfortunately, magic potions, soldiers, buildings and the like don't come for free in Kingdoms & Lords.
There are magic spells you can cast to assist you. You must choose which types of warrior to send in (swordsmen, axemen, spearmen, etc.) and use their skills accordingly. The turn-based battles in Kingdoms & Lords are fun to play, if not very original.