A classical and acoustic guitar setup guide.

1. Using your measuring tool, check the distance between the bottom of the 6th string (Low E) and top of the 12th fret. It should be around 3.5 mm (.13″).
2. Is it too high? Record the difference. For example, if your gap measures 4.2 mm make a note that there is a .7mm difference between the goal and what you have (4.2 – 3.5 = 0.7) Check the remaining strings. Look at the example below of the saddle’s height overage at the location of each string.To understand why you’d bring the saddle’s height down 6.4 mm instead of 3.2 mm, keep reading…..
3. Make a list of the amount you’re over on each string. Make a rough drawing of the saddle’s shape, label the Low E side and High E treble side, and list the overages across it as you check them. (see illustration above ). In the illustration above, all of the strings are too high at the 12th fret, so they will need to come down by removing height from the saddle. In the drawing all strings are 3.2 mm too high or more, so it follows that 3.2 mm may be removed across the entire saddle. But wait….
4. Think of your string as the hypotenuse of a triangle. In this case, the three sides of the triangle are: a) the flat surface of the soundboard, b) the saddle standing up is at a right angle (90 degrees), and c) the string sloping down back towards the flat pane. The sloping string is the hypotenuse. Because the 12th fret is located at exactly ½ of the length of the hypotenuse (see illustration below), you need to remove double the amount from the saddle’s height to achieve the change in height at the 12th fret you desire. (Quick Example: If you want to remove .8 mm at the 12th fret, you need to bring down the height by 1.6 mm at the saddle).
5. Again, we are still at the stage of removing a uniform amount of height from the saddle all the way across because all of the strings’ height is still too high. Do this by sanding the bottom of the saddle, making sure to hold it at a 90 degree angle. Before sanding, think!! Do I need to remove height from ALL of my strings at the 12th fret? If your answer is yes, continue. If your answer is no, skip to #6. Use a flat/true to sand the bottom of the saddle. It’s a good idea to turn the saddle around every few strokes across the sandpaper to make sure you do not sand an angle into it. No matter how straight you might think you’re sanding it, even the best luthier’s inevitable have a bit of bias toward one side when sanding.
6. Once you remove enough material that at least one string is at the optimum height, you’ll need to address the other strings’ height individually. Make a light mark on tight up against either side of the string (see illustration below). For the sake of reinstalling the saddle correctly when removing and reinstalling, label either side in some way that will help you orient it correctly when putting the saddle back in the slot. To make adjustments for individual strings’ height at the 12th fret, Use the same listing process as in step #2. With a sharp pencil, make a mark on the saddle’s front side, measuring down from its TOP at each string’s location. The mark you make is the amount you need to remove (remember the triangle/hypotenuse) to make the string reach the perfect height at the 12th fret. So, if your Low E string is still .7mm too high at the 12th fret, you need to make a mark down 1.4 mm from the top below that string’s spot. Repeat this process across the rest of the saddle. You’ll end up with a saddle that looks sort of like this:
7. Connect the markings and this will make, usually, an arc that will end up being the shape of your saddle.
8. Use a file, sandpaper, or belt sander if you have one to remove the material from the top of the saddle down to the pencil mark. Round over the corners lightly so they are not sharp (if left sharp they can break the string).!!
9. Reinstall the saddle into its slot and bring strings back up to pitch.
10. Check the height at the 12th fret for all the strings and repeat all the steps as necessary until every string is at optimum height. This will take time, don’t be in a hurry (especially if it’s your first go at this, oy vey!).

Make adjustments to the saddle until all strings’ heights measure in the range you want (see illustration chart above for my suggested string heights).