I had to correct that for you.
It -might- not be better for the game; all it takes is a single Party Fund and the new guy comes up a lot richer. Whereas 3 items and a parcel of money is fine. They don't have the higher level items the party currently has access to, but they're not behind on the curve either. That's how it should be.
Perhaps that's a correction. Any change is going to throw into question precise balance of the game.
But this isn't a party fund, it's divided up among the players. So for level 1, each player gets ~750 gold for magic, potions, and to save for later use. If a new player joined, they'd start with whatever items they should get for starting at a higher level and then get future gold rewards along with new experience and levels. The only tricky part is if they joined in the middle of a level, but if this reward isn't given until the end of the level, then it pretty much works out (at least, how I run it with normal treasure rewards).
I've gone in somewhat the opposite direction. Players get "tokens" that can be turned in for magic items of the token's level value. Buying magic items with gold is difficult, in no small part because the party is kept pretty poor. I doubt this would work very well for games that don't revolve around quests as the "tokens" are the reward for the quest, not something found wrapped up like a treasure parcel in some monster's nest. There are other benefits to doing it this way too, such as being able to have "bind on pickup" with magic items feeling somewhat less contrived since they're all coming from a quest provider and not found laying around in a dungeon.
I do like this method. Though, it doesn't solve the problem I'm looking to solve, which is the logistics of who gets what magic item.
The reason for all this is we're going to be doing a round-robin Eberron game. So, while every player will be present, one PC will be constantly missing, depending on who is DMing at the time. It would be much easier to handle rewards using gold as a player budget for their own equipment. They can decide if they want a level 2 now, or save up for something higher level.
That's the idea, anyway.
Also, there's room for putting this into treasure hordes, or whatever, whether it's gold or tokens. If a player would rather find a magic item that way, they can borrow against their future gold (covering the difference with their savings if they need to) and tell the DM what they would like to find. So, if a player wants to find a lost ancient sword, that can still happen. You could do this with tokens too, just like players can let their desire for a certain magic item be known under the normal system. You just simply present the token as a magic item straight away, and don't include the token as part of the quest reward (or in my case, they get a reduced gold reward at the end of the level).
