Good budgeting is half the battle.

Great. You want to buy a hi-fi system. The intriguing question is: How much do you want to spend? Fortunately these days you don’t have to fork out the equivalent of a mid-range automobile with all the optional extras in order to be able to buy a great-sounding system. Rather you should regard the configuration of your hi-fi chain as an alchemical process. It’s a smart combination of ingredients that produces the magic – not splashing your money about.
A useful rule of thumb would be: the system you want should be priced at no more than a tenth of your annual income. Even if you don’t have this amount completely “at your disposal”, most dealers are willing to arrange convenient finance at low interest rates.
The next issue is how to allocate your budget as skillfully as possible. About 40 percent should be invested in loudspeakers, because these have the greatest impact on overall sound delivery along any hi-fi chain. 30 percent should be invested in the amplifier. 20 percent in the source device (e.g. CD-player) and maximum 10 percent in the cabling.
If your total budget is around 2000 euros (around 2250 US dollars) and you want to buy a simple, great-sounding entry-level hi-fi chain, this gives roughly the following spread:
Loudspeakers:   850 euros (960 US dollars)
Amplifier:          600 euros (670 US dollars)
CD-player:         400 euros (450 US dollars)
Cabling:            150 euros (170 US dollars)
When in doubt you’re better off upgrading your system bit by bit than buying eight pieces of equipment all in one go. If, for example, you also want vinyl playback capability, you should not attempt to squeeze the costs of a record-player out of your starting budget, rather you should postpone buying it until the next “fiscal year”. First of all get really well-familiarized with your newly purchased system. Experiment! Why not perhaps borrow an amplifier or a CD-player from a friend and do some split-testing to find out how marked the resulting difference in sound really is. This enables you to estimate pretty accurately how much more you need to invest.

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