I think I am missing some mechanics. I am several lives in, my character is level 7 and still using lumber as my main income source. Also, is there some method of healing other than resting in the Inn? I can barely get anywhere in the tower because every two or three battles I have to run for the exit due to damage.
Lots of spoilers here, but:
Selene sells healing potions once you unlock them via her quest chain. Azax teaches all spells, including heal, at the magic school in level 5 of the desert. It's also possible to learn spells from spellbooks found in the tower. You can also sleep in your house rather than the inn. Or try priest if you want lots of healing power.
As for lumber being your main income source...you really should be well past that stage of the game by the time you're in the tower, but it's hard to know what you've missed. Have you unlocked the desert? Have you unlocked iron gear? What about steel? Have you rebuilt the orphanage to unlock the party system? Which classes have you unlocked? Are you managing your transformations well?
One common problem players have is trying to level grind rather than collecting achievemnet bonuses. XP requirements are exponential, and level 7 is the "sweet spot" that usually means its time to reincarnate unless you're pushing tower levels. For example, in the time it takes to go from level 7 to 8 to gain only a single extra stat point worth +5% to hit and defense on a single character, what if instead you leveled monk to level 7 to get a permanent +35% defense bonus to all characters, always? Or guardian for +14 health and +14 defense? Or warrior for +35% to hit with weapons? What about lumberjack to stack with the warrior bonus for a net +70% to hit with axes? Have you unlocked genetic lottery? What about durable?
Stacking achievement bonuses is a much better way to progress than grinding levels.
Specifically for the gold problem, you might consider unlocking rogue, as rogues have improved chances to open chests, and when you retire their achievement bonus gives a permanent +1 gold per level to every battle you win regardless of location. Which means that even your next level 1 character starting out in the forest will be getting +7 gold from every stray bunny girl, and if you're passing gear between characters via storage in your house or via the Legacy Vault, means you can save up gold pretty quickly for more expensive purchases. If you're not that far along, selling herbs is an option, though since you're in the tower you might be past that. Repeatable guild quests are often extra free gold for things you were probably going to do anyway. Worst case you can reset the tower to farm level 1 chests.
Really though, if you're passing gear between characters when you reincarnate, you should never "lose" anything, so solving the money problem is simply a matter of doing anything and letting the gold collect. Once you start climbing tower levels you'll generally have more money than you can spend. If survivability is still a problem, ant transformations are easy to get and trade -1 feet for +2 pairs of legs which is a huge net gain for armor.