There are two main reasons why personal budgets scare people. And if you don't have a personal or household budget already, it's likely due to one of these two reasons...
It's much easier to fool ourselves into thinking that "things aren't so bad" with our finances when we don't take the time to actually write down what we earn, what we spend, what we own and what we owe. In our heads our expenses and debts are always less than in reality, and we tend to overestimate our income earning ability and net worth. In fact, most people tend to underestimate their monthly expenses by as much as 10% to 20% (or more) when asked to come up with a figure off the top of their heads.
Ignorance may be bliss in the short run, but if you are struggling financially, and you know deep down that you are continuing to dig yourself further and further into debt, sticking your head in the sand will only make matters worse. To fix the problem you need to face reality, and a good start is to do these two things:
It is actually quite the opposite actually, but most people who are not living their lives on a budget seem to think a budget equates to a boring life. A budget does not mean that you can't go out for dinner and a movie, take a vacation, buy a big screen television, or a new car. But, it does make sure that when you do those things or buy those things...
Believe me, when you sit down in front of your big screen TV, or you're sitting on the beach on your vacation, you will enjoy those moments a lot more if you paid cash for them, rather than putting them on your credit card and paying them off over the next 10, 20 or 30 years. And if you live your life on a budget, not only will you enjoy the things your money buys you more (not the credit card company's money), you will be able to afford to have and do more things that bring you happiness.
When you think about preparing a budget, don't think about all the things that you won't be able to have or do, rather think of all the things you will be able to afford in the future because of your budget.
Personal budgets give you peace of mind and happiness, and you can't put a price on that.