Data Methodology

Overview

This document explains how LifeWorthIT calculates lifestyle decisions, cost of living estimates, and affordability analysis. Our methodology is designed to provide reasonable estimates based on aggregated public data and market averages.

Important: All calculations are estimates based on average data. Actual costs and circumstances can vary significantly based on location, lifestyle, and individual factors.

Income Normalization

When you provide income in a specific currency, we normalize it to the currency of your chosen living country using approximate exchange rates. The normalization process:

• Converts income to a base currency (typically USD) using approximate exchange rates
• Converts from base currency to the target country's currency
• Applies estimated tax rates based on the income source country

Note: Exchange rates are approximate and may not reflect current market rates. Tax estimates are based on average effective tax rates and may not reflect your actual tax obligations.

Tax Estimation

Net income calculations include estimated tax deductions based on:

• Average effective tax rates for the income source country
• Typical tax brackets and rates for the income level
• Standard deductions and exemptions where applicable

Tax estimates are approximations and do not account for:

• Individual tax situations and deductions
• Tax treaties between countries
• Multiple income sources
• Tax credits or special circumstances
• Changes in tax laws

Actual tax obligations can vary significantly. Consult with a qualified tax professional for accurate tax planning.

Cost of Living Modeling

Monthly living costs are estimated based on average market data for the following categories:

Housing (Rent)

Rent estimates are provided in three tiers (low, average, high) based on:

• Average rent for one-bedroom apartments in different areas
• Market data from various sources including rental platforms and cost of living databases
• Regional variations within countries

Low-end estimates typically represent budget-friendly or suburban areas. High-end estimates represent premium or central urban areas. Actual rent can vary significantly based on specific location, property type, and amenities.

Food Costs

Food cost estimates include:

• Average monthly grocery expenses for a single person
• Occasional dining out (moderate frequency)
• Basic food staples and common items

Estimates assume a moderate diet and do not account for specialty foods, high-end dining, or dietary restrictions.

Transportation

Transportation costs include:

• Public transportation (monthly passes or regular fares)
• Occasional taxi or ride-share services
• Basic vehicle maintenance (if applicable)

Estimates assume use of public transportation as primary mode. Car ownership costs are not included unless specifically relevant to the country.

Healthcare

Healthcare cost estimates include:

• Health insurance premiums (where applicable)
• Out-of-pocket medical expenses
• Basic healthcare services

In countries with public healthcare systems, costs may be minimal or zero. Estimates assume basic health insurance coverage where required.

Utilities

Utility costs include:

• Electricity
• Water and sewage
• Internet and phone services
• Heating/cooling (where applicable)

Estimates assume average consumption for a single-person household in a standard-sized apartment.

Miscellaneous

Miscellaneous costs include:

• Personal care items
• Entertainment and leisure activities
• Clothing (moderate purchases)
• Other discretionary expenses

This category represents typical discretionary spending and can vary significantly based on personal lifestyle choices.

Lifestyle Score Calculation

The Lifestyle Score (0-100) is calculated using a weighted index based on four key factors:

1. Housing Affordability (30% weight)

This factor evaluates rent costs as a percentage of net income:

• Rent ratio below 25%: Excellent score (30 points)
• Rent ratio 25-35%: Good score (20 points)
• Rent ratio 35-50%: Acceptable score (10 points)
• Rent ratio above 50%: Poor score (0 points)

2. Cost Pressure (25% weight)

This factor measures total monthly costs as a percentage of net income:

• Cost ratio below 60%: Low pressure (25 points)
• Cost ratio 60-80%: Moderate pressure (15 points)
• Cost ratio 80-95%: High pressure (5 points)
• Cost ratio above 95%: Critical pressure (0 points)

3. Disposable Income (25% weight)

This factor evaluates remaining income after all costs:

• Disposable income above 40%: Excellent (25 points)
• Disposable income 20-40%: Good (15 points)
• Disposable income 5-20%: Tight (5 points)
• Disposable income below 5%: Negative (0 points)

4. Basic Lifestyle Comfort (20% weight)

This factor assesses if essential costs (housing, food, transport, healthcare) are reasonable:

• Essential costs below 70% of income: Comfortable (20 points)
• Essential costs 70-85%: Manageable (10 points)
• Essential costs above 85%: Strained (0 points)

The final Lifestyle Score is the sum of all weighted factors, rounded to the nearest whole number (0-100).

Affordability Verdict

Based on the Lifestyle Score, affordability verdicts are assigned as follows:

• 80-100: Very Comfortable
• 60-79: Comfortable
• 40-59: Tight but doable
• 20-39: Financially risky
• Below 20: Not sustainable

Data Sources

Our cost estimates are based on:

• Aggregated public data from cost of living databases
• Market research and rental platform data
• Government statistics and economic data
• Average market rates and estimates

Data is updated periodically, but actual costs can change due to economic conditions, inflation, and local market dynamics. We recommend verifying current costs through local sources before making decisions.

Limitations and Disclaimers

Important limitations of our methodology:

• All calculations are estimates based on averages
• Actual costs can vary significantly by specific location within a country
• Personal lifestyle choices greatly impact actual expenses
• Exchange rates and tax rates are approximate
• Economic conditions and costs change over time
• Calculations assume a single-person household

This methodology is designed to provide reasonable estimates for decision-making purposes. It should not be considered as financial, legal, or tax advice. Always consult with qualified professionals for advice tailored to your specific situation.

Contact

For questions about our data methodology, please use our contact form.