For most people, the process seems to be this: you (or your kid) want to learn to play guitar. You go to a music store you've heard of or Google tells you about (probably a large, possibly evil corporate retailer) or a pawn shop. OR, maybe a family member plays and has an extra guitar lying around to donate to you. Maybe you received (or gave) the guitar as a gift. At the very end of the process, people start to think about lessons. Unfortunately, that leads to a huge number of students starting out with guitars that aren't really right for them in one way or another. Below are some mistakes I see on a regular basis:
1. Buying a Guitar for a Little Kid
TL;DR: If you're buying a guitar for a kid under 10, get a ukulele instead. They're appropriately sized for little kids, simpler to play, and a way better deal for the money.
When I was in my last year of college, I was teaching guitar for a non-profit music institute, and one of my first new students was this wonderful 5 year old girl whose parents had already bought her a 1/2 size Squier Stratocaster. It was almost as tall as she was, and we had to move heaven and earth to find a strap that would hold the guitar where she could reach it. It was years before she could play the whole thing.
Guitars, even guitars advertised as 3/4, 1/2 or even 1/4 sized, are just way too big for most kids under the age of 10.
A standard guitar is about 25-26" across the length of the strings (this is called "scale length"). A typical neck is about 1.75-2" wide. Acoustic guitars tend to have deep bodies, as much as 4 inches, which complicates playing them even more for short arms. Electric guitars are typically solid wood, sometimes weighing more than 8 pounds, about the same amount as putting a couple of bricks in a kid's bookbag.
Let's look at a typical model advertised as a "1/4 size," aimed at young beginners with "small hands." It has a scale length of 18.9", a body depth of 3.15", and a nut width of 1.75", which is roughly 3/4 of the size of a regular guitar. You know, the one that's taller than your 6 year old. It costs $140 (just by itself -- see #4), and well... I haven't played it but the reviews aren't necessarily great. Guitars this small are often just a hair better than toys.
So what's the solution? A Ukulele! A typical ukulele has a scale length of 13-15" and is smaller than 2' in total. They have four strings, which are tuned similarly to the first 4 strings of a guitar, so everything transfers. They generally use nylon strings, which are much more forgiving for little hands than steel strings, and the best part is they're cheap. Don't get me wrong: you can spend $1800 on a uke if you want, but a real, actual, solid, playable ukulele can be had for $60. (Don't forget accessories -- see #4) A nice ukulele made of mahogany and bocote with a striking grain that I kind of want now? $120, cheaper than either of the fun-size guitars I linked above.
2. Buying the Cheapest Thing You Can Find
TL;DR: The cheapest guitars you can find will probably be of minimal quality and impede your progress as a player if not frustrate you to the point of quitting. You can resell a higher quality instrument to recoup some costs if you stop playing or outgrow your beginner guitar.
Recently, I had a young (7 years old, see #1 again) student whose relatives bought him one of these super-cheap, no-name electric guitars. In the first lesson, he was having trouble getting any fretted notes to ring out, so I picked the guitar up and started to play it myself. Basically, the guitar's neck was bent so much it couldn't play in tune anymore. I explained what was probably wrong to the parents, and they took it to a repair shop. Even after repairs, parts of the guitar won't play at all.
If you go to any big-box store's website right now and search "guitar," you will find a bunch of guitars in the $40-90 range sold by companies named something like "Very Good Products," described as "Kid's Guitar" (don't do it! see #1,) or "Beginner's Guitar." They come in bright colors, they are dirt cheap, and what the hell? If it turns out I hate guitar after 3 weeks, at least I'm only out $50. The problem with this line of thinking is that cheap guitars can make you hate playing guitar.
Extremely cheap guitars often have problems with playability: strings that are too high off the fingerboard are hard to press down, causing pain and fatigue. Strings that are too close to the fingerboard cause an unpleasant buzzing sounds as the strings touch the other frets. Poorly set-up (or assembled) guitars can cause issues playing in tune. Cheap hardware like tuning pegs can cause issues staying in tune. Low quality wood or electronics can cause issues with the tone you get from a guitar.
Do you need to spend $500+ on an instrument you don't know how to play yet? Not at all. Most big-name guitar manufacturers sell several beginner instruments that are affordable (in the $100-200 range), but are still a reasonable quality. You won't find any of the fanciest rare tonewoods or the coolest features, but they will be durable, playable, and capable of making nice sounding music. Also, if you have a quality guitar that you're not using anymore, someone will buy it from you. They will not consider buying a toy they can get brand-new for under $60.
3. Choosing a guitar for superficial reasons
TL;DR: Don't let brand names, bright colors, shapes, and associations with artists or genres be the only reason you buy a guitar. Get a guitar that feels comfortable to play and sounds good.
For the last 60 years, guitar based music has been a major part of popular culture. We've all seen a thousand pictures and videos of iconic musicians playing iconic guitars. Jimi Hendrix and Eric Clapton playing Fender Stratocasters. Slash with his Les Paul. B.B. King playing Lucille, his custom Gibson ES-335. Wes Montgomery and his Gibson L-5. When you strip away the marketing, however, you find out that most famous guitarists used lots of different guitars in the studio, and many are paid to endorse guitars in public. You don't need a Fender to sound like Jimi, and sometimes Jimi didn't play Fenders.
Another side effect of all this marketing is that brands and guitars get associated with genres, as if you can't play certain styles of music with certain guitars. But most electric guitars are extremely versatile. You might associate "Flying V" shaped guitars with metal, but Albert King played them, too. Tons of Heavy Metal, Hard Rock, Jazz, and Blues players have all used Les Pauls and Stratocasters and ES-335s at different times. Can you listen to a record and tell what kind of guitars are in use? Don't rule a guitar out because it doesn't look like the kind of guitar your favorite player poses with in pictures.
How should you choose a guitar, then? Play as many guitars as you can get your hands on. You should be trying a guitar out in scenarios closest to how you spend most of your time playing and practicing. How does the guitar feel? Do you like how it sounds? Try to avoid fantasizing about how cool you'd look performing with the pointy asymmetrical V-shaped thing and think about if you can sit down with that thing and struggle to play "Mary Had A Little Lamb" without wanting to kill yourself because it's poking you.
4. Not budgeting with accessories in mind
TL;DR: Expect to spend at least $60 more than the cost of your guitar (or uke) on other stuff you need to make it work. If you don't have at least $350 to spend, consider starting with acoustic guitar, so that you can skip buying an amp.
So, you're buying your first guitar, and you've done some basic research on guitars. You've looked at some of the most commonly suggested beginner models from listicles and review aggregators, and set yourself a budget of $200. You go to the store, you play a little of everything, and even though you diligently ruled out every guitar that cost $200.01 or more, you somehow ended up spending $300-500 (or left empty-handed). It all happened so fast! Why?
Unfortunately, for the most part, guitars need accessories. You need a case to protect your guitar from the elements or accidental damage ($25+). You need a strap to hold your guitar up ($10+). You need a pick to play your guitar ($2+). You need strings ($5+). You need a tuner to keep those strings in tune ($15+, although there are free apps that work). You can find a more detailed list of what you'll need here. If you're buying an electric guitar, you'll need an amplifier, which could easily cost as much as your guitar itself, cables ($10+), and very quickly you'll realize that $200 entry-level guitar is actually going to cost you $400.
Some companies like Gibson (Epiphone), Fender (Squier), Yamaha, and Ibanez have put out beginner kits that have all of the stuff you need bundled together for a couple hundred bucks. These aren't the worst things in the world, by any means, but if there are any savings, they come from low quality in at least one half of the bundle. This Yamaha kit, for instance, comes with a cheap practice amp. This Epiphone kit with a guitar bearing Slash's name doesn't even come with an amp at $250, while others offer better quality but no real savings.
So what should I do? Expect to spend at minimum $60 above the cost of the guitar itself to get started. If you don't have $350 or more to spend, consider starting with an acoustic guitar, OR...
5. Not considering used gear
TL;DR: There's a huge secondary market for music gear of all types, and if you're willing to put in the effort you can get some serious deals.
So, you went to a music store, $350 in hand, and bought a perfectly respectable rig for a beginner: an Epiphone SG (sweet walnut finish!) and a Vox Pathfinder 10W amp. Or a Takamine GN10-NS. You smartly left room in your budget to get the case, strings, picks, etc., and factored in sales tax. You could probably hold on to this gear for a year or more before you start really itching for a major upgrade. Good job!
Of course, if you had gone to a website like Reverb.com, you could've gotten the same gear, used but in excellent condition, for $285. You could've gone cheaper still if you like the cherry finish. OR, if you wanted to spend the same $350, you could've gotten a 30W Marshall amp (normally $250+) and either a way nicer SG, this Ibanez RG350, or this Jackson "Dinky," any of which would've eaten up your whole budget and then some at the store. On the acoustic side, you could've gotten either of these nice Ovation guitars or this antique Classical guitar from Sicilly.
And if you're really willing to do some serious legwork, here's a craigslist ad for a Line 6 Amp head and a Crate speaker cabinet. Each of these components could easily have cost more than $250 when they were bought (and they seem to be out of production, so it's tough to find an exact retail value) but $250 is a steal. You'll have to do some searching, go to a person's house, preferably with a friend, test the gear, and transport it safely. You'll have to overlook some physical imperfections. It's totally worth it.
If you stay away from these very common mistakes, you can get a suitable instrument and be ready to learn without breaking the bank or wanting to throw the guitar out the window. Then you'll be ready to sign up for lessons. If you need more information, don't be afraid to consult with a teacher before you go out and get anything!
PS. Here's a picture of me getting taught how to play guitar by the David Russell, playing my handmade, 100% expensive Daily guitar. This is a Daily guitar currently for sale, and I'll just let you look at the price. That is not what I paid for mine -- I went to a consignment shop in the Baltimore Area. Mine was built in 1994, and had some minor repairs done as well as some cosmetic flaws. I got a world class instrument because I didn't care if it had some scratches and dents, and I ended up paying half of what you'd expect for a real-deal world class guitar.