Sponges do soak up a lot of product. You really don't want to pay $ for foundation that you end up wasting almost half of the bottle or more! 

Fingers are okay; they don't absorb the makeup like a sponge, but your fingers often spread the foundation unevenly and it's messy too! The best method is to use a foundation brush; it uses the minimal amount of product, but it also spreads the makeup more evenly so you get the best coverage. A lot of people will complain about how foundation brushes can make the foundation on your face appear streaky--that's why you keep stroking until it's well blended. You can use the brush to tap onto and blemishes or other trouble spots to build coverage. 

You can use a spronge to clean up any edges, but it's just not recommended to apply the makeup. 

My experience with fountation brushes is that they spread the best when they're clean, as opposed to having a lot of product build-up by being dirty. Do clean your brushes regularly! :-)

I like to pump a little bit of foundation on the back of my clean hand because the warmth of my hand warms up the foundation and it's a little easier to spread. 

I definitely agree, foundation brushes are the best way to go in my opinion! Also, I find a brush better for mixing in concealer that I use to hide bags under my eyes (ha!) with the rest of my foundation. Like Volta said, you can always use a sponge to smooth it out at the end. Also, slightly unrelated but to save having to reapply always make sure you seal your foundation with some loose powder, I find that whatever foundation I am using, it always wears better with a little help from powder!

Like the other two posters, I agree that a foundation brush is the best way. It also helps blend the foundation if the product tends to separate. What I like to do is wash my hands, and then apply the foundation to the back of my hand. I then use that as a palette to load the brush. I recommend starting with a less expensive brush brand to see if you like the method, before investing in a more expensive brush. I have used the e.l.f. foundation brush and had a good experience.

If you are in a rush and want to use your fingers this does work, but you need to washing your hands first and never dip your hands into the product in the jar or packaging. you can really spread bacteria this way.

I have the greatest tip that works. Use a foundation brush. Put your foundation on it, and spray with a little Evian Water. You can get it at ULTA, Sephora, and I think some drugstores. This thins the foundation, resulting in a really dewy, flawless face. Stay away from sponges as they dry your skin. I guarantee this works, and you will be happy with the results.