One thing to keep in mind if you're not giving out flat rewards is that you then need to make sure that you present everyone with an equal chance to earn rewards. For example, while it's cool that the thief gets xp by picking locks, there also needs to be arcane challenges for the spellcasters to deal with, combat at close and far range for warriors and archers, and so on. Giving out flat rewards allows for more flexible adventure design, since the challenges encountered can be tailored to what would be strong from a story standpoint, rather than what will give everyone a fair chance to progress. I'm not saying don't give out individual rewards / xp, just that there are pros and cons.

Also, I've never had an issue with groups not spending money, so that problem is likely one that that specific group deals with. If anything, groups that I'm in seem more prone to spend all their money—in one campaign, a barbarian made such a routine of blowing his ENTIRE cut of the treasure from adventures on booze at the inn that through his carousing he single-handedly financed substantial renovations and upgrades to the inn, put more money into the local economy, the upgraded inn began to attract more travelers and merchants needing a place to stay (which further helped the town's economy) and basically the small sleepy little town started to become a sizable and quite prosperous trading town.

All because he would routinely go out, make a small fortune beating up dragons or the like, and then buy rounds for everyone at the bar until he was broke.