Upgrade your equipment as soon as you get the money for it. Don't worry about saving it for new gear, as whenever you do find new weapons and armor, it'll be around your currently equipped gear's level. The only true factor that should influence your decision are the perks. Each piece of gear might come with a unique perk on it, and it's up you to choose your favorites! As you level up, you're learn new skills, but also new Runes, modifiers for your skills. One of the best Runes to use is the Frost rune for Whirl which chills the enemies, slowing their movement and attack speed down. Ascension will send your Knight back to the very first floor of the dungeon and you'll lose all of your equipment, starting out with the Rusty Sword, Worn Armor, and Old Cloak again. You keep your level and experience and all of the skills and runes you've earned thus far. And you will gain special tokens that let you purchase permanent bonuses for your knight. You should ascend whenever you get the chance! Always sell your old equipment especially if you plan on ascending.