I like this approach. In finance you have three basic statements: - balance sheet - profit & loss - cash flow It seems like looking at net worth of a perso

I like this approach. In finance you have three basic statements: - balance sheet - profit & loss - cash flow It seems like looking at net worth of a person is like only looking at the balance sheet. The mag wealth approach also takes potential cash flow into perspective, by estimating ability to raise cash, even if it is through loans. It does provide a more complete picture.