Set a budget! It's not as difficult as you may think!
The simplest was to decide on a budget is to make a list and prioritize which elements of your wedding are the most important to you both. If you can't imagine not having flowers dripping from every nook then put it at the top of your list. If you could care less whether or not you have fancy favors for your guests, you could itemize that towards the bottom of your list. This way, when it comes to making important decisions about whether or not you can afford something, it will be easier for you both to to visualize your guests dancing to your rocking band over choosing that pricy wedding cake.
After prioritizing your list, research items at the top of your list. In the case of S and I, our venue was most important to us. We started out by looking at several venues in and around our area and compared prices. Once we had an idea of how much similar venues were charging, we could gauge how much we would have left in our budget for other necessities (catering, decor, etc.).
Don't get overwhelmed! Husband and I had no idea how to even begin the process. Once we committed to our beautiful barn we knew about how much we had to work with, which made it a bit easier (although no more enjoyable) to cut back in other areas.
If you are lost as to how to begin the process or not sure how to set a budget, this is a good guide to get you started!