Whats the cheapest way to set up a lighting system for my digital camera?

My digital camera doesnt have the features of the slr. So I need it to be continuos lighting for taking head shots.

If you want to set up lighting for portraits, then you really should invest in an SLR. Once you do, you can use on-camera flash, supplemented by portable flash units on stands set to synch with your on-camera flash. You can have some of them bounced off of different surfaces, like umbrellas in white or silver.

You will expose for the main light, and use the others for filling in shadows. You can experiment with the angles of various lights, distance to subject, bounce surface, etc.

Also think about your backgrounds. You can buy backdrops, or find a plain background that won't take away from your subject. Remember to position your subject several feet away from any background, not right up against a wall.

I have used 3 or 4 desk lamps or clip-on lamps with full-spectrum light bulbs. place one to shine behind, 1 face on and one to either side as needed. To modulate the light a bit you can bounce them off of aluminum foil covered cardboard or pass them through various types of glass blocks (used for home windows) or most any type of metal screens, wicker, or whatever. Experiment! The total light can be controlled by buying various wattage bulbs, using 3 way light switches, placing window glass between the light and the subject smeared with vaseline... many possible choices.

Years ago before we had digital SLR's, a client of mine wanted digital images made of his products. All I had at the time was a Nikon Coolpix 990. Because it is a digital camera, light balancing was easy (I used the menu to tell the camera what kind of lighting I was using). Because we could see the results of the lighting right away, the process became very easy.

So, here's the deal. Use your hot lights (continuous lighting) to light your "heads" and then adjust them for the perfect lighting effects. You can leave the camera on a tripod, remove the memory card, upload the images to your computer and make critical adjustments from there. Because you have set the camera to expose in the incandescent lighting, the color balance should be just about perfect.

A set of good tungsten lights will cost you about a quarter of what a studio flash setup. If you could use them with your camera.

Home Depot - Get some work lights...
You could use a white sheet for a bounce.

They call it the sun.

You can get some lighting such as table or floor lamps or even worklights. If your camera has light settings, choose the one appropriate for the light you are using (halogen, tungsten, etc.) To reflect this light the way you want you can use a white sheet or even posterboard. I got several sheets of foamcore (available at craft stores and left one white, bought one in black (to absorb the light when you are getting a reflection of light you don't want), and covered one in tinfoil to get a stronger reflection.