Our thoughts on setting up a home recording studio are that you should start with the bare minimums, and I do mean minimums, and then buld up from there based on your needs. That way you avoid spending tons of money on lots of recording equipment you don’t need and never learn how to use, which is VERY common. We start you out with a budget of zero to maybe five dollars. Then you can upgrade your home studio for like $50 – $100 bucks for the first several levels. Eventually, if you really need it, the increments will go up to a few hundred bucks, but at least you’ll know you need everything you buy.
Of course there are all kinds of opinions out there for what “essential” means. Here is an article that you may find interesting and looks at things a little differently: http://www.audio-production-tips.com/essential-home-recording-equipment.html#