What bird food and bedding should I get from Petsmart?

You should try the bird seed at Feed & Seed Barns. They are cheaper and fresh, better quality and will be much better for your birds. Some you might be able to buy bulk but you shouldn't get more seed than what will last you six weeks.

As for the "bedding" sort of stuff, you can just use newspaper. Build up a big pile until you get one and when you have to put some in the cage you can just grab what you need and you won't have to worry about it.

I recommend this sort of cage for just a single budgie:

http://www.google.com.au/imgres?q=budgie+cages&hl=...

Get one with a square top as this give you more use of the space. This would be about .... $50 at the most ?

Don't over-crowd the cage with toys and perches like some people do. Make sure their is some space to spread their wings and fly but still enough toys to entertain them.

Use rope perches and natural branches instead of those boring dowel perches. Using perches of different shapes and sizes is good for exercising their feet and I believe prevents bumblefoot.

I usually use paper towels, but never use newspaper. There are toxins in ink (for birds). Also, try to avoid bird foods with menadione in it. It's basically a food preservative that cuts years off your bird's life. Foods without menadione usually are the more natural foods. Look at the ingredients on the back of the bird food bag!

I agree with Charly, the best bedding would be the chunky pellets you can buy in big bags. Much more absorbant than sandpaper