Creating and living by a budget is nothing more than using an efficient system of running your household. It may not be easy to see the forest for the trees at first, but with practice you can see where your money should be going and where it should not be going.
The key to any budget, whether it's for a household, a business or a government (listen up, Washington!) is sometimes painful honesty about what you really need and then let the things that you don't need take a back seat for awhile.
What do you need? Food, clothing, shelter, medical attention at times, insurance, taxes... make your list (you'll need different categories and more of them) and then look back over your last few months and see where you spent what. Did it fit into your categories? Why not?
Write it all down and keep working at it until you can make sense of it. That's the hard part. We have a tendency to fool ourselves. That new shirt might have been a necessity, but it might very well have been an indulgence. Be honest with yourself, as much as you can.
Yes, honesty can be brutal. It can hurt, but you can't really control your money until you understand what you're really doing with it.