The WBL guidelines were created in part for this purpose.
I can't get to those links from work (those are blocked but this messageboard is not, go figure....) so you can go do a search on "wealth by level" to get to them.
Most games have a rule that you can only spend up to 1/2 of your starting wealth on a single item.
Most of our games the GM just lets the players go through the list of mundane and magic items and buy what they can afford. Some GMs will restrict certain items.