I'd like to take you through what I have done, to create what you might call a poor man's New Yankee Workshop.
With the low prices for which you can now get quite decent power tools, it can be quite affordable, and suddenly no end of simple projects will be far more possible.
Basic work area and tools for your workshop
Norm from the New Yankee Workshop may have a hundred different power tools and accessories. We will have to make do with a lot less. The question is, what tools are the most essential? I will leave out the need for hand saws, hammers, screwdrivers, electric drill etc - I expect everyone to have a few essentials already. Not least plenty of clamps!
The key question and the one which may stop people before they start is space. A standard sheet of MDF/chipboard/plywood is 2.4m x 1.2m and for a lot of practical jobs you need to be able to deal with this.
I am using a single garage, actually a very small single garage of the type that makes you think the house builders anticipated the development of the Sinclair C5 and expected it to be universally adopted.
As such I don't have the native room to deal with this size of sheet, unless that is I align things, so I can open the garage door to create temporary manouvering room. This is indeed what I have done.
Let's take a minute to talk about shop safety
I won't patronise here, but if you are only used to fairly pedestrian tools, you may not appreciate the amount of dust and shrapnel a benchsaw and some other power tools can create. I wear large glasses; if you don't then please invest in a good pair of safety goggles. If dealing with MDF in particular, then use tools with dust bags and attach a wet and dry vacuum cleaner to your bench saw.The work bench
Before we can do anything, we need a place or places to work. I have an old oak work bench that came with the house.But this is not enough space to manipulate anything large. My solution is my old dining room table, itself from a car boot sale. This has had clamped to it, a sheet of 18mm MDF.
The picture shows the first "clever bit" in creating a practical workshop, when you don't have all the room in the world. I have built a secondary plynth that sits on the work bench and has been made to be at exactly the same height as the bench saw.
This arrangement allows support for sheets of wood as they are sawn with the benchsaw, or conversely you can saw a sheet with the circular saw if the sheet is placed on both the plynth and the benchsaw.
You can see the benchsaw is held in place with bolts, and there are spare bolt holes. All the tools that need a stable base are first mounted onto sheets of 18mm mdf, and bolt holes cut to align with the work bench holes, allowing them to be swapped in and out as needed.
So on to the actual tools.
Benchsaw
These vary throughout the world; notably saws in the UK will almost always come with a blade guard for safety. As you can see here, there is no guard, as it has been removed. A blade without a guard is much more versatile.This saw cost £35.00, and with the ever plummeting cost of power tools, you may be able to get an even better deal. Despite the price is is very effective. You can connect a workshop vacuum cleaner to the back, to keep the dust down,
When looking to buy your own saw it is worth noting the main limitation of this one.
As you can see the parallel guide is only good for 20cm. This is a serious limitation, and the one I come up against most often when working and wishing for more space/tools.
In our small work shop, we do not have the sheer range of equipment and must learn to make do.
Hence in the picture below, we see the addition of a cut out placed over the bench saw, with the height simply adjusted by slivers of wood. With this we can cut to a set depth for jointing work. It may well be crude, but it is effective.
Circular saw
If you are working with sheets of wood, then unless you have a far bigger bench saw that I do, you will find certain cuts are too big for the space in your work shop, unless you use a circular saw to do the cutting.
Circular saws, with a half decent saw, will cut fairly straight with practice. But why run the risk? Clamping a long straight piece of wood to your sheet to act as a guide takes seconds.
Jig saw
The humble jig saw avaiiable for under £20 will always have its uses. If you need to cut any shape out of a sheet other than a simple rectangle, one cut will need to be done with a jig saw.
Biscuit jointer
As this list of tools is going roughly in priority order, it may seem odd to place a tool some people may never have heard of so near the top of the list.
But for creating a quick solid wood joint, without the benefits of being a master wood worker, or having access to sophisticated joint cutters, a biscuit joint is a great way to do things.
You can do biscuit joints without a specialised tool, but at £45, the benefit of a tool designed for the task cannot be overstated.
Power planer
Under £24 for a Ferm power planer, that will do a marvelous job of levelling those little errors. No workshop should be without one.
Router
The router is used for grooving, beveling edges and all sorts of other tasks.
Since it requires more skill to use than all the other tools, the quality of this tool and the use of a router table are important considerations. I am using a Ferm 1050w router purchased for £36, and of all my tools, this is the one I wonder most about the need to buy on quality rather than price.
Mitre saw
A Mitre saw is undoubtably one of the "sexier" bits of workshop kit. 
I certainly enjoy the ease of use, when I use it. But you may find this is not as often as you anticipate. I'd consider this an ultimately optional powertool. But with a 10" blade Ferm model at less than £50, it is a handy thing all the same.
Scroll saw
For awkward shapes, available for as little as £35. Mine is a second hand model.
Again an optional addition to your workshop.
Where to buy the tools
There are quite a few places on the net these days where you can get a very good deal on tools. I use Screwfix who have a good reputation for service and next day delivery. They also stock the Ferm brand of tools which are remarkable value for money.You will also find Screwfix invaluable for bulk packs of screws (not surprisingly), nails, and all manner of accessories. It makes serious sense to get a few of their variety packs of screws of all sizes. They are very cheap and having the right size screw/nail to hand avoids the temptation of using something wrong simply to avoid a trip to the DIY store.