How do you determine how much to spend on speakers

I listen to all speakers I can that purport to be "state of the art" or "reference level". I ignore price as much as I can. They I pick my favorites and decide if I want to spend that much money.

So far my favorites are at $75k, $50k, and $35k. That's right.... winners over the field of near $200k speakers, thankfully. I can be nearly as satisfied with the $35k speakers as the $75k speakers. It's important to be honest with yourself and to avoid "dreaming" about owning a speaker just because it's out of your price range, or because some reviewer raved it. Everyone wants what they can't have, that is part of the human condition.

I'd rather listen to my favorite speakers with a $1k amp, a $400 cd player, and a $800 used preamp than splitting the money up more evenly. And I do have those pieces at those market values, along with state of the art pieces to compare them to, so what I'm saying is based on experience.

If you could afford those favorites you pick, without materially changing your standard of living, but your wife won't let you buy them, my only advice is to try to pick your audio equipment more carefully than you picked your wife!

Main thing is to make sure speakers are not undersized relative to the room. Larger more expensive speakers typically with larger and/or multiple drivers are needed for good full range sound in larger rooms.

IF you do not care much about extended and balanced bass levels, you can get by with something smaller.

There are even some larger monitor style speakers out there that may be up to the task, but you will often pay a premium for those and rightfully so.

There are many schools of thoughts on this subject but I would spend twice the amont on [2] speakers that I would spend on amplification.
Same principle applies to source components, again I would spend twice the amount on [2] speakers.
With a $5,000 budget that roughly works out to:
Amplifier: $1,200
CD or Turntable: $1,200
Speakers [2] $2,400
with $200 left for decent cables.
BTW, you can get a damned good system with a $5,000 budget if you do your research, shop around and yes, haggle. Always be prepared to walk away...

I would recommend spending 50% on good used speakers. Spend 25% on a good integrated amp, 25% on a CD/SACD player, and then take the last 25% that you didn't tell your wife about and buy a tuner and some decent cables. I realize that puts you at 125% of budget, but like public works projects, the term "budget" is nearly meaningless when it's applied to a stereo system.

By looking at my checkbook.