Proportion of expenses

Good thoughts above. The speaker/amp interaction is perhaps the most critical, and since speakers do vary much more in their presentation than amps, I’d suggest starting with speakers and then choosing an amp based on their demands/requirements. There are certain electrical interactions that are very important; read through posts by members almarg and atmasphere to understand some of them. If I were starting from scratch, I would work upstream, then. There are interactions between amp and pre-amp that are also critical to getting a wide, smooth frequency response based on their input and output impedance. With respect to pre-amp, if you will have more than one source, then source switching is of course necessary. If you will have only one source (for example from a digital to analog converter (DAC) or multiple digital sources through a multi-input DAC, then you can use a simple passive volume control or passive pre-amp. An excellent passive is MUCH less expensive than an excellent active pre-amp.  However, with passives, componenet matching is critical, so read up on that, if it’s an option. IMO, if you are going primarily or exclusively digital, you’re in a good position right now to maximize your investment. High quality high resolution DACs right now can be had very inexpensively, and can be driven from digital files ripped to a computer.

If you are going analog, then that is an area that requires, IMO, more direct guidance. Give us some more information in the areas noted by the posters above (room size, musical preferences, approx. budget) and we can start to get more specific.

Finally, a very good way to get started is to go to one of the shows that are out there; Rocky Mtn Audiofest, Capitol, THE, Newport, etc. Take a tour around to get some idea of what impressed you, then go back to those rooms and ask questions.

As a start, I found "The Complete Guide To High End Audio" Fifth Edition by Robert Harley very helpful as an overall guide to your questions. It is available as an iBook on iTunes. I refer to it from time to time.

It has a section devoted to cost allocations which is very useful.

The book has been the best investment I've made in Hi-Fi to date.

I favor the notion of selecting the speakers first, because they truly limit what your system can do, there is great variation in their sonic portrayal and you need a speaker that works for you - - and the speaker/room interaction is critical to success.  It is really good to get really good at dialing speakers in to their optimal location within a room, so you will want to study and practice up on that.  Jim Smith has built a fine business based upon his experience and skill at just this.

I fully agree with Swampwalker:  once you select the right speakers for you and your room, then the speaker/amp interaction is the next thing to get right.  Matching the load of the speaker to the drive capability of the amp is key, and then you also need an amp that matches the sonic palette the way you like.

And, yes, I also think the preamp is "the heart of the system".  And who can argue that if the source cannot deliver it, nothing downstream can make up for that, so....

Oh, and I have allocated ~25% on the cables in my system; certainly not by plan, but by happenstance from comparing various options in my system and finding that they often make as much of a difference as a solid component upgrade.  I would never have predicted to end up in that circumstance, but I am happy that I did, given the results.

In the end, everything matters - - but I do think starting with the speakers in the room makes the best sense (certainly has for me).

Front end - house mortgage
Application - Midsize Car
Speakers - Children’s college education

The most important aspect is to tell your wife that the cost is no more than 50% of what it actually is.  If you can get away with 10% she's a keeper.