Soul match is not worth it until you start getting green gear. You can forge your low tier materials into high tier materials in Tools so you can have more tries at getting something decent with purple quality. In the first playthrough I'd say forge new stuff if you aim for something specific or didn't find an upgrade in some time (I was crafting new purity fists every 2-3 main missions because they didn't want to drop). Armour I'd just get whatever has the best defense while still maintaining less than 70% eq weight
Forging is useful when you'd like to get a specific weapon or armor at a high rarity. Say, if you wanted Imagawa Yoshimoto's hat in Exotic quality. You could farm his fight, and maybe he could drop an Exotic hat; or he could drop it at a lower rarity, or only drop the rest of his armor, or none of it! It would be much faster and easier to simply spend money and materials at the Blacksmith until you get it.
Soul Matching is useful to improve gear you already have. The Base equipment, which you keep, will level up to match the level of the Material equipment, which is consumed. This way, you can continue using gear that's starting to become lackluster. Additionally, if your Material has an inheritable modifier (indicated with a |>| icon) and is at full Familiarity, the Base equipment will acquire it.
The Blacksmith isn't very helpful during your first playthrough beyond just Disassembling and Refashioning (style matters!). It's much more efficient to improve your equipment by just playing normally and equipping whatever good drops you get.
Crafting is useful only if you have smithing texts or use gears available to craft, and not use anything else. As a spear user, i got smithing texts for spear armor sets, thus, regularly crafting them when their level were too low.
In your case, if you stick with what you loot, just keep blue/purple gears of highest defense/attack (never going to C Agility of course). If you happen to find +values (purple with +1 / +2), soul match them on your own purple gear to increase their +values. It works as a parallel level, and gives good amount of ATK/def. But those purple +values turn completly useless in ng+, since you'll have to change your gears to green
Soul-match's purpose is to increase the level of a gear by sacrificing a higher level gear. Rarity has its importance here too, low rarity can't transfer their higher level. But the cost becomes high really fast ! Soul matching with same category gears (katana with katana, helmet with helmet, etc), even same name, greatly reduces costs.