Actually, this game doesn't really require that much if any grinding and you'll gain more experience by completing quests then you ever will fighting enemies. And, the game is designed to be beatable (though more difficult) at lower experience levels (see this thread for what I mean:
viewtopic.php?f=30&t=951). As for health, it definitely can be troublesome at times, especially if you're low on money, but the INNs aren't that expensive and your characters in battle can heal each other pretty well without potions. That said, the various caves (ones with the re-spawning monsters) have gold that can be collected over and over again and if you can beat the creatures, you can sell the drops for money. Anyways, many people were having trouble because they were always maxing out their gold all the time and never really using it. If you're playing on hard (like I did) then it might take you a little while to build up a nice base of money. Until then, it's all about money management. Hope this info helps
