I believe your shop layout is as important as your tools.
Over the past two weeks, I've been building a new shop in my basement. I put alot of thought into designing it. Over the past few years, I've making knives in my spare time at work, or coming in on my days off. I am constantly setting up, running to my boxes for tools, or picking up afterwards. Its time consuming and tiring.
In my shop, my first concern was efficiency. I wanted a layout that flowed. I can start in one place, and work my way around in a circle. At each station I have all the tools I need for that particular process neatly arranged on pegboards or hangers. For instance, at my drill press, I made a wooden plaque with each of the drill bit sizes I use drilled into it. I labeled each bit for its intended purpose (ie small rivet, large rivet, kydex screw, 1/4" pin). I also included the center drill and countersinks I use.
I tried to keep the messy processes close to each other, and the sheath making (Kydex) and layout areas clean, and away from the mess.
Another concern was Lighting. I spent about $500.00 wiring and lighting my shop. I probably went a little overboard, but I hate working in a cave! I'm currently in the process of building an air handling unit which will remove all the dust from each machine. Its a pretty good size blower with a suction line to each machine and a 5" discharge outside the shop. I made the benches 38" high, so I don't have to bend over so much, and placed antifatigue matting on the floor.
Including machines and wiring, I'm about $3000.00 into my shop. Add in materials (belts, emery paper) and hand tools (like files, punches, scribers, etc, etc,) probably more like $3600.00. That includes 3 Grizzly grinders (2-1"X30" and 1-2"X72", drill press, band saw (both Craftsman), air compressor, buffer, bench grinder, bead blast cabinet, propane torch (high flow), air compressor, porta-band, two vises, heat gun, and small convection oven for tempering. I'm currently shopping around for a lathe and mill or a quality combo set. That'll probably run another $3K-$5K.
Its amazing how fast this stuff adds up! Can you do it cheaper, yes, you can. Many have proved its possible. If you're serious about knifemaking, think ahead and have a plan. Save up and get everything at once, or get the necessities first, then a piece at a time later on. It'll go alot easier in the end if you have a plan.