How do you determine how much to spend on speakers

No more than $1000.... DCM TFE200's!

I'm with Uraniumcommitte's 1/2 to 2/3 of total component spend, as a rough rule of thumb for speakers/sub (excluding room treatments and very small rooms). Distortion figures for speakers often make them the weakest link in the chain.

I am in general agreement with Shadorne but there are some special cases. One that I am familiar with is Maggies, where a pair of MG1.6, for example, fit well with electronics costing four or five times as much (and that is not including vinyl playback which would run it up to at least ten times).
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That is a difficult question that has many variables. Price is only one. You have room acoustics, tubes or solid state, type of music, etc. I have found that system matching is manditory if you want the best possible sound. If you unbalance your system with one component then your overall coherancy is thrown off and is disjointed. This won't be glaringly apparent, it will just be a feeling that things just don't mesh. When this happens, you start listening to the sound rather than the music. This is my great judging factor in audio. Is it musical?

There's a lot of responses already, so I'm sure my opinion here will die, ignored, in the ether... I don't think there's a percentage of a budget that you can copy/paste into making a system. What I can say is what _I'd_ do with $5k.

As little as $500 for used Vandersteen 2Cs or as much as $1,500 for used MartinLogans (SL3 or Aerius i are in that range).

Somewhere under $1,000 for a used amp.

Somewhere under $500 for used source components.

Throw in some interconnects.

Buy a used dirt bike. Probably a KDX-220.

The main idea is that I don't think you can build a permanent system in one fell swoop. You need speakers that speak to you personally. You're going to be staring at these things for years (probably) and that alone can fill your mind with doubts that'll affect your opinion of their sound. (Not that it's right, but it happens.)

Listen around, read, take your time and find the right speakers. Then you can find the right amp for them (I'm sure most of us can tell you the joys of the right speakers and the wrong amp... IT SUCKS!). However you do it, I'm sure you won't be anywhere near the $5k proposed... either 2/3s of it or 3 times it. =]