To get started, you will only need a few basic tools. Why then are there so many different types and versions you may ask- convenience and speed. A pair of needle nose pliers with a side cutter will bend and  cut wire, hold parts,  and, with care, even strip wire, but- the cuts won’t be neat and flush on a PC board, and you’ll probable cut the wire almost as many times as you strip it. So, here are the affordable basics:

Wire Strippers - The simple side cutting type are best, and inexpensive. They can be used to both strip and cut wire, and are adjustable over a wide range.

Wire Cutters - Diagonal is standard, but Flush cutting is easier to get close to the PC board surface to trim off component leads.

Needle-nose Pliers - The small 4” size is a good start. Get the larger sizes when you can.

Tweezers - With electronic components getting smaller, you will need these. Get stainless steel ones, as you will probably use them to hold small parts being soldered, or to remove solder.

Screwdrivers - Small Phillips (#1) and Straight blade (3/16) These often come in sets with the larger and/or smaller sizes.

Solderless Breadboard - Get the larger one with 830 contact points and two sets of buss strips on each side. They cost about $5-6, and as the name implies, they allow you assemble circuits without soldering. The board is arranged as 2 rows of 5 interconnected sockets spaced .300” apart, the pin spacing of most ICs, on .100" centers. You plug an IC in, and connect it to power, ground and other components by jumpering connector points with 22# or #24 solid wire. This permits quick and easy changes. Use different color wire to indicate different signals: Red for +5, Black for ground, Yellow for inputs, Orange for outputs, etc...

Wire - 22# or 24# (read as "24 gauge"; the bigger the number, the smaller the wire), tinned solid wire. Get at least 3 colors, Red, Black, and ‘other’. This will make checking and trouble shooting easier. (Electronix Express and Apogee Kits sell wire in small quantities. Apogee has a wire kit “Solid 24 AWG K/MOWM”, with almost 200ft of wire in 10 colors for $8 as of 10/23/08) This wire will be used with the solderless breadboard.

Test leads - These are just a length of flexible, stranded wire with a small alligator clip at each end, and are very handy for making quick test connections. Usually you can get them in a package of 10. Most of them are pretty cheap, using very fine wire, and only crimping the wire to the clips instead of soldering them. (When they fail you can upgrade them to a better quality wire and solder the connections.) When last I checked, Electronix Express’ set was one of the few quality sets I have found.

DVM, or Digital Volt Meter - Spend a little more money here. Get one that not only measures AC/DC volts and amperes, and ohms, but has a built in frequency counter and can measure capacitance. These will usually also be able to test transistors and diodes. Some even come with temperature sensors. (Don’t under estimate the usefulness of measuring temperature- you may need to check how hot power componets are getting.) A good meter will cost about $10-35 depending upon features. How to use it will be covered in the "Test Equipment" section.

Power Supply - You will need 5 volts at a modest current (1/2 to 1 amp) for most projects and experiments. There are two ways to go here, buy a regulated wall plug-in module, or use an unregulated DC wall transformer and build a simple power regulator circuit as your first project. You will need to solder for either option ( the regulated supply will need at least a socket with wires soldered to it to plug into the breadboard), so on to the last basic tool. (The power supply will be covered in more detail in the "PARTS" section.)

Soldering Iron - Here you also want to spend a little more money. You don’t need an $800 temperature controlled soldering station, but I’d recommend something a little better than the flea market $5 iron. An iron of about 20-25 watts with replacable tips works well for most applications. Tined, iron-plated tips will last much longer than a straight copper one. (The copper tip slowly dissolves in the solder.)

Soldering Iron stand - This should have a coil of wire shield around the hot part of the iron, some weight to it so it doesn’t slide around, and a sponge or course wire tip cleaner.

Solder - For commercial products, manufacturers are switching to lead-free solders. These are almost pure tin, have a higher melting point (440°F ), and their solder joints can be problematic if not done right. For prototyping and hobby applications, 63 % tin, 37% lead (63/37 SnPb) is the eutectic alloy (meaning it has the lowest melting point- 361°F), and has very good flow characteristics. This lower temperature also means there is less chance of damaging components due to over heating. 60/40 SnPb solder melts just a little above 63/37, flows just as well, and is a little cheaper. Most solder for electronics has a rosin core flux, and leaves a neutral, non-conductive residue. Do not use plumbing type solders, as these often have acid cores to help get clean joints on not so clean pipe. If not completely removed, the acid-based flux will cause continued corrosion and, because its conductive, will effect circuit performance.

Comming next - Parts . . .

Sources -
(check them all- their inventories change)

Electronix Express (www.elexp.com) Full featured DVM # MS8264 - $26 (Checked on 10/23/08)

Marlin P. Jones associates (www.MPJA.com)  Good selection of small tools, and lots of surplus parts.

Apogee Kits (www.apogeekits.com) Wire kit- Solid 24 AWG K/MOWM- almost 200ft of wire in 10 colors for $8 (checked on 10/23/08)

Electronic Goldmine (www.goldmine-elec.com)

Harbor Freight (www.harborfreight.com) Small tools