I have learned a lot about buying tools over the past 20 years, from working with my dad, involvement in many student clubs, my own hobbies, engineering research projects, and building up my garage shop. The goal of this guide is to organize my mental notes on thrifty tool-buying with the hope that it will help some people. If you have $1000's and want to buy a whole shop worth of tools in one go, this is not the guide for you. If you want to, or are in the process of, buying tools as you need them and are on a budget, this is the guide for you.
I've organized this post by general descriptions first, then a buyers guide at the end.
First, you need shop space in order to store your tools and use them. This might also be the most expensive tool/shop related thing you buy: land/square footage is expensive! If you're buying a house, make sure you have garage or basement that you can use for your shop, and that it is easy to access (some tools are large and heavy). When I was young, this was our basement. Now I have a garage, and since it's Florida, I only need to put a car in it if there's a hurricane. If you're in an apartment, you'll need a temporary multi-use space solutions, like a tool-closet, fold-down work bench, plastic sheeting for dust containment, etc. If you simply don't have room, you can rent storage units/garages with electricity and use those as a shop. If you're a school organization, get your own space from the school and fiercely protect it. More space is ALWAYS better. You can have the most efficient storage solutions in the world, and someone with more space will be able to organize their stuff better than you. I have a large-ish two car garage with 7.5ft ceilings, and I wish I had a four car garage with 14ft ceilings (though if I had that, I'd probably want even more space, haha).
The environment of your space is also important. Ideally, it should be climate controlled and a place that can get messy. AC is especially important in hot+humid environments. If it's too hot in your garage, you won't want to work in it. Humidity will cause iron and steel to rust, and since most tools have steel in them, most tools will rust in a humid shop.
Power tools are powered, usually by electricity. Commonly used power tools are: cordless drill and driver (yes, those are different, and you should have both), corded drill, circular saw, jig saw, table saw, miter saw, shop vacuum, palm/orbital sander, belt sander, disk sander, angle grinder (useful for far more than grinding angles), welders, etc.
Some power tools are pneumatic. The air supply is compressed with a compressor, which is electric powered, but the actual work done by the tools is done by the air. Some pneumatic tools are lighter/better than their electric counterparts. Common pneumatic tools: nailers, staplers, grinders, buffers, impact drivers/wrenches, socket wrenches, drills, hammers, paint sprayers, etc.
I suggest waiting to buy a power tool until you know you'll need it.
Machine Shop Tools
Metal/machine shops often have much larger, more expensive tools. These include mills, lathes, metal brakes, drill presses, large band saws, etc.
Unless you're opening a machine shop business (in which case, this guide isn't for you anyways), you should wait to buy these until you need them, or if you stumble across a super good deal and think you might use one in the future. See below.
Tool Storage and Organization
Another often overlooked thing is how you're going to store and organize your tools. Piling them on top of each other on a shelf or in a bucket is not a good solution: it'll be hard to find a tool when you need it, and it's easier to break tools that way. Each tool should have a specific place. Workbenches often have cabinets/drawers for small power tools and hand tools. Free standing cabinets are good for larger power tools. Some people like displaying their tools with peg boards or French-cleat systems. Large, heavy tools should generally have a designated stationary place in your shop.
Like a workbench, you should try to get your storage and organization solution sorted before getting in too deep with tools.
So you've figured out what tool(s) you need and researched them. There are many good places to buy tools, and many bad ones, and it's usually dependent on what tool you're buying.
You can buy pretty much anything online, and it's often listed cheaper, but tools are usually heavy, and shipping on larger tools can be very expensive. You can also get scammed pretty easily, since you can't actually inspect the tool you're buying...buying from reputable people/websites is a must. Even if you get your money back from a scam, it's always a pain and a waste of time. Amazon often has decent deals, but you have to watch for knock-offs and where the tool is shipping from (overseas shipping can take months). You can get ok deals on new and used tools on eBay, but make sure to check the seller's location and feedback rating. Major hardware stores have online shops, and there are also many specialized tool websites.
Local places (USA) to buy tools include major hardware stores like Home Depot and Lowes. Don't forget ACE hardware: they may be smaller, but there are usually more of them, and they often carry many small/hard-to-find tools/items that the big hardware stores don't. These are great places to buy pretty much every hand tool you'll need, and most power tools.
There are also "cheap" tool stores, like Harbor Freight ("Harbor Fraud") and Northern Tool. These places sell lower quality tools for A LOT cheaper than other hardware stores, and often cheaper than you can buy online. All of the tools they sell cut corners in manufacturing and quality control. This can lead to huge safety problems (google "harbor freight car jack stands"), but usually just leads to wasted money. Their website ratings are also inflated: if you see a rating less than 4 stars, assume the tool is worthless. Things I would/will never again buy from Harbor Freight: air tools (other than a paint sprayer), things holding a lot of weight (car jack stands, engine cranes), electronic test equipment, needle nose pliers (had a set that I could bend with my hands). Some things that are good to buy from harbor freight: super glue, sockets, wrenches, screw drivers, drill bits, sand blasting media, angle grinder disks, tarps, furniture dollys, paint brushes, etc. If it's a very simple item, chances are better that they didn't screw up making it. This is only true if you aren't using these tools anywhere near their limits. For example, I have broken harbor freight crescent wrenches and sockets before, but only in high torque applications. Don't expect their drill bits to be able to drill through hardened steel. I've been too scared to buy many of their power tools, so I can't speak to those, but reviews seem to be mixed: some power tools are good, some aren't. Generally, you can find online reviews (text or videos) by googling "harbor freight" + the tool name. Be warned though, these "cheap" tool places aren't always cheap. I've found better deals at home depot and walmart before. Examples: T-squares were cheaper and better quality at home depot, and lithium grease tubes were cheaper at walmart. I strongly suggest checking prices and reviews before buying anything from stores like these.
Speaking of walmart, stores like Target and Walmart can be good places to find basic tools, and they're usually reasonably priced.
Don't buy tools at flea markets. The new ones are almost always cruddy imported junk. The used ones are usually worn out, and if not, are usually priced higher than than they would be on craigslist. Garage sales can be ok, if you can find the tools hidden by all the other junk, but can also be a huge waste of time.
My favorite place to buy tools is local classified ads, like craigslist/facebook marketplace. If you're patient and in a decently populated area, almost every tool imaginable will eventually pop up, and you can get some incredible deals. Workbenches, storage solutions, and safety gear, too. The item is local, which means no shipping, and you can inspect it before buying. However, you need to already know what your looking for and the information about the tool when you go to buy it (but you should know that stuff anyways since you're planning to buy it). Inspecting it is important...there are a lot of scammers. The pictures will usually you show you what kind of condition it is in, but inspect it carefully when you go to buy it. If the person sounds sketchy when messaging them, don't bother. If you're handy, you can get amazing deals on broken tools (even get them for free) and fix them yourself. I did this with my air compressor: I bought three partially working, similar craftsman air compressors. Fixed one, sold it, used another for parts, and got the third fully working. Ended up costing me about $0, not including my time. But if you're patient enough, and quick about messaging the seller, you can get amazing deals on fully working (sometimes new) tools, too: I've scored a big, fully working table saw for $25, and a mini metal lathe for $100. I've also bought a tool I know I'll need, then end up reselling it for the same price (or more) because I found a better one or better deal later. As long as you only buy good deals and don't wreck the tool after you buy it, you won't lose money this way (only time driving around), because the used tool price has already bottomed out. Craigslist/FB marketplace are also great places to buy collections of tools if you're starting out, like toolboxes full of hand tools: you get your storage solution, screw drivers, sockets, wrenches, etc all in one go for much much less than you could buy them new. And new tools from "cheap" tool stores (see above) are often worse quality than used, good-quality/brand tools, so don't always assume new is better.