I built my first setup piece by piece, so I know you don't need a fortune to make records that sound good. This is the budget-friendly gear I'd point a new producer to: interface, mic, headphones, monitors and the small stuff that makes a room usable...
Clean preamps and rock-solid drivers. The one I recommend first to anyone starting out.
Focusrite Scarlett Solo 4th Gen USB-C Audio Interface
Great little 25-key controller for beats on the go. Pads are fun and it's tiny enough for any desk. Keys are small, so it's not for serious piano playing.
Akai MPK Mini MK3 25-Key USB MIDI Keyboard
The classic first studio mic. Clean and detailed on vocals and guitar for the price. It's a condenser, so it picks up room noise, and you'll need an interface with phantom power.
Audio-Technica AT2020 Cardioid Condenser Mic
My go-to headphones for tracking and mixing checks. Detailed, comfortable and tough, and the detachable cables are a bonus. They're a bit bass-forward, so cross-check on monitors.
Audio-Technica ATH-M50X Pro Studio Headphones
Compact nearfield monitors that actually make sense on a small desk. Honest and clear for the price. They're small and light on deep bass, so don't trust them for low-end alone.
PreSonus Eris 3.5 Powered Studio Monitors Pair
Sturdy tripod boom stand that holds the AT2020 without drooping. Easy to position over a desk or guitar. It's a bit bulky, but it does the job.
On-Stage MS7701B Euro Boom Mic Stand
Cheap fix that tames plosives on vocals. Clamps on easily and does what it says. It's a basic nylon one, so expect it to wear out eventually.
Dual-Layer Pop Filter
Thin foam panels take the edge off flutter echo and make a bedroom vocal booth sound better. They won't fix bass problems or soundproof the room, so set expectations accordingly.
Acoustic Foam Panels (12 Pack)
A decent shielded 10 ft XLR with proper connectors. Quiet, no hum in my setup so far. It's not a boutique cable, but you don't need one at this level.
Neutrik REAN XLR Cables, 10 ft
Foam pads that decouple small monitors from the desk and tighten up the low mids. Cheap and an easy upgrade. They're sized for 3 to 4.5 inch speakers, so they suit the Eris 3.5.
Studio Monitor Isolation Pads (Pair)
Folding studio headphones that have been in booths forever. Not the most comfortable, but very detailed and they tell the truth about a mix.
Sony MDR-7506 Studio Headphones
I'd reach for these when mixing long sessions at home since they stay fairly neutral and comfortable.
AKG K240 Studio Headphones
A classic I'd keep around for tracking scratch vocals or guitar cabs; it's durable and forgiving.
Shure SM58 Dynamic Vocal Microphone
Small, affordable monitors that are a solid step up from computer speakers. They won't replace big studio monitors, but they're great for getting ideas down.
Mackie CR3.5 Studio Monitors (Pair)
A dynamic mic with both USB and XLR outputs, so it works for demos now and grows with an interface later. It handles an untreated room better than a condenser.
Audio-Technica ATR2100x-USB Microphone
A budget dynamic mic that does USB and XLR. It's what I'd hand to a new producer who needs to record vocals tonight without spending much.
Samson Q2U USB/XLR Dynamic Microphone
A step up from the AT2020 with a switchable pad and low-cut. It sounds clean on vocals and acoustic guitar, as long as the room isn't too noisy.
Audio-Technica AT2035 Condenser Microphone
A very cheap 2x2 interface that gets a mic and guitar into your computer. The preamps are basic, but it's a fine backup or starter box.
Behringer UMC22 USB Audio Interface
Getting monitors off the desk and up to ear height made a bigger difference to my mixes than any gear upgrade. Cheap and sturdy.
On-Stage SMS6600 Monitor Stands (Pair)
A proper boom arm keeps the mic where I need it and the desk free. It's smooth and quiet, and I stopped getting stand noise on my vocal takes.