littlecanoe,
I was in the same boat about two years ago. With three kids and a stay at home mom, the coffers at my house aren't running over. Thus, my hobbies are on a shoe string budget.
This is where I have to differ a little from the previous posts. I tried the cheap chisels and even tried making my own with mixed results. If you have the time and a access to tool steel and a torch, by all means you can make your own and some good ones. My time is very limited and I had to pay for my steel. The chisels will make your work MUCH easier and look so much better. I can get my $10 chisels sharp enough to shave with, but the first time I hit a piece of wood with them it rolls the edge. I bought a 12-piece set of Frued chisels and a 6-piece set of Crown chisels. The Freuds were regular $300 and I got them for $85. The Crowns were regular $60 and I got them for $35. I find myself using the Crowns much more due to their size. The Freuds are just a little too big for tight work, but work great for hogging out areas. Both are sharp enough to cut off a hair thin piece of wood.
Crown 6-piece set
Freud 12-piece set
Keeping your tools sharp is paramount, whether it is a chisel, scraper or file. If you are sharpening your chisel after 5, 10 or even 20 strokes with it, you are using all of your time sharpening. I usually hit my chisels on the stones before I start and they are good for several hours worth of work. Buy the best that you can afford and a 6-piece set is more than enough for most of your tasks. Look on ebay for the Miller Falls set. They are a good older set to get started with.
I have found a great use for the cheaper chisels. I flatten the forward angle on them and then push the cutting edge into the grinder just for a second. This caused the cutting edge to look more like a screw driver, but it's edges work great for scraping. Once they start getting a little due, couple of seconds in the grinder and they are back to form. Super handy scrapers already contoured.
Yard sales are great for files and assorted tools. I have a Harbor Frieght close by and they have files, rasps, punches and such SUPER cheap. I don't have a band saw, so once I get the action inletted, the drawknife ($7 off ebay) takes large amounts of wood off in short order. Then the files and rasps take over. A person can't have enough files!
Good luck.
Kris