I have used tap water for my tank. Check out my tank thread here and you will see what happens to a tank using tap water.
http://www.reefcentral.com/forums/showthread.php?t=1852918
While it is possible to use it, if you are vigilant with water changes, testing and what not, algae WILL become a huge issue.
Corals when they grow will be slow and not as brightly colored and some you will not even be able to keep at all because they need the better quality.
You will need to put the water in buckets, add the prime mix the salt then let it sit for 48 hours to allow crap to settle on the bottom. Try not to use the bottom inch of water when doing a water change because that crap on the bottom contains some heavy metals and other bad particles you don't want in your tank.
If you are just starting out a reef tank, (meaning not set up yet), you can start off with tap water and give it the two to three months to cycle, add small coral frags of easy growing stuff like zoas, acans, duncans and a fish or so, and in the mean time save up for an RO or RO/DI unit, and buy it when you can.
If you have to buy the parts separately to improve water quality you can do that, and just get the RO unit. That alone will make a tremendous difference. It did with my tank when I started switching over.
Take a look at page 4 and 5 of my tank thread. At the end of Oct, beginning of Nov I started doing water changes with RO water. Not only did I see a massive jump in growth in most of my sps, xenia and acans, but the algae started to back off and now I have next to none.
So if you want to start with tap, you can do that, but switch over to RO as soon as you can. If you know someone in the hobby with an RO unit who is willing to make some for you ask.
You can also buy it as walmart or some grocery stores.
But save up your money, or ask someone to buy it for you for your birthday. Bulk Reef Supply has some of the cheapest ones out there. Also keep an eye on Kijiji or Craigslist for people getting out of the hobby and selling their stuff. You can get cheap stuff that way.
So, just to reiterate, you can start with tap water if you are in a fix, but it is always much better to start with RO or RO/DI right from the beginning.