Summary: When setting up a home studio, first check the acoustics of the room and make any necessary changes.
The first thing a lot of people do when setting up a home studio is going out and buy acoustic foam and cover every surface they can with the material. What they should do is evaluate the acoustics of the room and then diagnose the extent of the problems.
First, walk around the room and clap your hands as hard as you can from every part of the room. Then listen closely to the reverberations. The best case is hearing a pleasant reverb. This pleasant sound comes in rooms with high ceilings and great acoustics. On the other hand, if you hear a metallic ringing sound, then you are probably in a small square room with reflective surfaces.
In the first instance, you will probably need very little acoustic treatment for the room. In fact, you probably could get away with not doing anything, but a little acoustic treatment could improve the sound further. In the worst case scenario, you will need extensive acoustic treatment with as much sound absorption as you can fit in the room.
As you cover the walls with acoustic foam panels, walk around and keep doing the clap test. Notice how the sound changes and improves. Ideally, find a reference point in another room location and compare how the sound differs. Eventually, the metallic sound will get less and less and then disappear completely.