A 10-point plan for creating your own art collection

1. Start small

Many galleries produce limited editions – usually prints and photographs – of artists' work to coincide with exhibitions. The Serpentine, Victoria Miro, White Cube and the 176 Gallery (all in London), for example, have offered works at prices from £200 upwards. Works by Matthew Barney (The Serpentine) and Peter Doig (Victoria Miro) will go into the thousands, but these are key names of the 21st century, so it's cheap at the price. Look out for more whimsical tie-ins, like the Grayson Perry tea towel which coincided with his 2006 show at Victoria Miro and cost a mere £11.50. The collecting section of the Saatchi Gallery has a good round-up of limited-edition work that's currently on sale.

See serpentinegallery.org, victoria-miro.com, whitecube.com, projectspace176.com, saatchi-gallery.co.uk

2. Choose a theme

Collector Valeria Napoleone is only interested in work by contemporary women artists. "It wasn't a rational decision," she says now. "But in the late 1990s, when I started collecting, there were so many great women like Barbara Kruger, Cindy Sherman and Elizabeth Peyton around. I was attracted by what I saw to be a new language. The first piece I bought was a photograph by the American artist Carol Shadford, of soap bubbles with women's faces and bodies reflected in them. It somehow opened a door." Now Napoleone's collection includes key pieces by Lisa Yuskavage and Francis Upritchard (who represented New Zealand at the 2009 Venice Biennale) and a red clock by Pae White. "She made a collection of 12 clocks – one for every month of the year. I'm Aries so I bought the one for my birth month."

3. Discover tomorrow's Turner Prize winners today

Remember, Tracey Emin and Jake and Dinos Chapman were once but humble (well, perhaps not) graduates of the Royal College of Art. Conceptual artist Martin Creed won the Turner Prize in 2001, but in 1990, he was just another graduate from The Slade. Art school degree shows are the places to find tomorrow's great artists today. Even better is the New Contemporaries showcase, which offers a very rigorously edited selection (chosen by a panel of artists and art professionals) of the very best of Britain's art school graduates in one handy exhibition. It is currently on at the A Foundation in Liverpool, and moves to the ICA in London on 26 November. Iwona Blazwick, director of the Whitechapel Art Gallery, recalls judging the New Contemporaries show in 1989 and much admiring a Damien Hirst piece called God – a pharmaceutical cabinet with medicines arranged on shelves according to their usage in the body. She would have bought it if only she'd had £850.

See newcontemporaries.org.uk; afoundation.org.uk; ica.org.uk

4. Make sure it fits

Like that flat-screen television that's just a little too large for your humble living room, make sure that you're buying something that won't overwhelm your home, or prove so underwhelming as to appear like a small blot on a large wall. Some pieces even require structural alteration. In 1988, a steel sculpture by Richard Serra fell through the floor of a gallery in New York, seriously injuring two employees. The fact that it weighed 16 tons (the equivalent of about two large African elephants) had not entirely been taken into account. This is unlikely to happen to mere mortal collectors; in 2008, Serra's 12-4-8, made of three plates of steel and created in 1983, sold at Sotheby's in New York for £1m.

5. Go back to school

Everyone will tell you the same thing: you learn by looking. But you also learn by knowing. All galleries run excellent lecture series; the Whitechapel Gallery offers a course every year in October, just before Frieze, costing £595, which involves meeting collectors, visiting artists and brushing up on the story of post-war art. It culminates in a trip round the art fair to put the new-found knowledge to the test. Universities and auction houses also run short courses. In the meantime, teach yourself.

"Look at as much as you can," says gallery owner and photography aficionado, Tim Jeffries. "But also get the auction catalogues, they give you a great snapshot of where the market stands." The much-admired collector Anita Zublodowicz, who also runs the 176 Gallery in Kentish Town, north London, studied at Christie's before deciding to start by collecting Modernism. Her first buy was a Ben Nicholson in 1994 at a Sotheby's auction. She was so nervous, she bid against herself. whitechapelgallery.org

6. Check out the cheaper fairs

Frieze is fabulous, housed in its own architect-designed tent (this year it's by Caruso St John) and this weekend it rounds up heavy-hitting galleries showing some stellar pieces. But it's a bit beyond the average budget. The London Art Fair, held every January at the Business Design Centre in Islington – the polar opposite of an architect-desgined marquee – has an excellent section called Art Projects, where younger, edgier work is on sale. The Affordable Art Fair, held next week in Battersea Park, south-west London, is a fun day out, with a £3,000 price limit. For details see frieze.com; londonartfair.co.uk; affordableartfair.co.uk

7. You have to live with it to love it

Unless you are the most hard-nosed speculator, chances are you will be living with your purchase. So make sure that you love it and that its value to you is first and foremost aesthetic and emotional.

The seasoned collector Judith Greer owns a How High The Moon chair, a now much sought-after piece by the Japanese master furniture designer, Shiro Kuramata. "It means so much to me," she has said, "but because it's about my life. I spent many important years in Japan and it's a continual reminder of that."

8. Join a group

Outset was founded in 2003, assembling philanthropic types and spending their yearly donation (suggested amounts are between £1,000 and £7,500 annually) on new contemporary art – some of which is donated to the Tate Gallery's permanent collection. Outset members benefit from invitations to key art events, artist studio visits and the warm fuzzy feeling of knowing they have supported modern art. Or join Artangel's Company of Angels. This organisation has been responsible for some of the most extraordinary art projects of the past decade, including the backing of Roger Hiorns' copper sulphate crystal cave in a south London council flat last year, and Jeremy Deller's film recreating the Battle of Orgreave in 2001.

See outset.org.uk; artangel.org.uk

9. Set a budget

One of Outset's two founders, Yana Peel, has assembled a notable collection of contemporary work since her first acquisition in 2000, a series of Gerd Winner drawings of the South Bank, where Peel and her husband then lived. So how does she go about budgeting?

"Since my earliest days as a gallery-going young banker, I set aside an annual amount for art that felt instinctively comfortable," says Peel. "That said, great art is not about comfort and the artworks I treasure most have often required sacrifice or compromise. These days, quality definitely takes precedence over quantity."

While collector Valeria Napoleone sticks to her strict yearly budget, the Whitechapel's Iwona Blazwick says, "I'm on a curatorial salary, so I can't go over £2,000 and I usually pay in instalments."

10. Get a loan from the Arts Council

A scheme called Own Art in England and Scotland, and Collectorplan in Wales, was set up by the Arts Council in 2004. This allows you to borrow up to £2,000 interest-free in order to buy a specific piece of art. It has to be paid back in 10 instalments over the year. artscouncil.org.uk