I feel like there are a lot of good reasons to spend gold on better magic items. Even in a story heavier game I play in, PCs make enemies that need dealt with via violence.

It just changes it from "I can better kill this lich and loot his better stuff"

to:

"I'd like my children's safety to no longer be threatened so I need to acquire at least a Fey-Slaughter Longsword to stop the Chimeric Wizard, Mortressus from teleporting around while our Barbarian beats the snot out of him."