How is net wealth defined?

Net wealth is defined in a comprehensive manner that incorporates more than just the values found on a standard balance sheet. The correct definition includes net worth from the traditional balance sheet, which is the difference between total assets and total liabilities. However, it also factors in the present value (PV) of future earnings and unvested benefits, acknowledging that future income and potential resources play an essential role in an individual's overall financial situation. Additionally, it accounts for consumption goals and bequests, as these reflect an individual's financial aspirations and limitations.

This approach provides a fuller picture of an individual's financial health, incorporating both current resources and future expectations while also considering planned expenditures and gifts. It recognizes that net wealth is not static and can be influenced by future earning potential and personal financial goals. This makes option C a robust definition that captures the complexity of personal finances in a way that mere asset totals minus liabilities cannot.