It certainly shouldn’t hurt the performance to have lower resolution. I generally run the game at that resolution when doing standalone testing, it works great.
It doesn’t give you much room to play with though, I certainly would recommend getting a larger monitor (dual monitor would be even better while debugging Blueprints) for your own sanity.
If I were to upgrade your system incrementally, I would start with the monitor, followed by the Ram, then the cpu, then the video card. I think that would be an optimal use to improve your experience with UE4.