Setting up your own guitar is a great way to get an understanding of how to change the feel of the guitar and finding out what your personal preferences are. There are very few things as useful as experimenting in order to decide how you want to change something, and thankfully there are some guidelines to give you a good starting point.
Setting up a guitar is not a particularly complex task, however it is one that requires exact measurement and adjustment and some time to get it right. So lets take a look at what we need to adjust, in what order, and why. The order is critical because of how each step affects the next.
Firstly, the starting point is always neck relief. Put simply, neck relief gives the strings room to vibrate without interruption, it is not how the overall string height (or action) is set. The neck relief is adjusted via the truss rod. To set the neck relief place a capo on the first fret and then fret the 17th fret. On the 8th fret, the distance or gap between the fret and the bottom of the string should be 0.25mm. A feeler gauge is really required here.
Next up is the nut. Once again using a feeler gauge, measure the distance between the first fret and the bottom of the guitar string. The E, A, D & G strings should be 0.22mm and the gap for the B & E strings should be 0.18mm. There are specialist files for nut filing that match string gauges and adjustments can be made with these.
Next is the string height (or action). This is commonly the area which differs from player to player depending on personal preference, however as a starting point, setting the distance between the 12th fret and bottom of the string at 1.6mm will give you a place from which to start experimenting.
The intonation is the final step so far as the strings are concerned. The intonation is adjusted by sliding the saddles on your guitar back and forth in order to ensure the guitar is in tune all the way up and down the fretboard. If your intonation is off then your guitar may sound in tune when you're playing open chords but as you start playing higher up he fretboard the guitar will start to sound out of tune. Checking your intonation is achieved simply by tuning a string, then fretting the 12th fret and playing the string again, it should be no sharper or flatter than playing the string open. If the fretted note is flatter, then you need to slide the saddle for that string towards the nut, if the fretted note is sharper then you need to slide the saddle towards the back or bridge of the guitar. Once all the strings have been adjusted, your intonation is done.
Tips for a bit of help:
1) Be precise, this really is one area where patience and precision pay dividends
2) Use a good Tuner
3) Set up in a well lit area to make it easier to see fine measurements.
From there, you can start experimenting to your heart's content, even if you don't plan on doing your own setups forever at least you'll be able to tell a guitar tech exactly how you like it!