Jim Cramer, host of CNBC’s “Mad Money” and Investment Clubsays that while Gen Z faces financial challenges, many members of the group also spend too much money on things they don’t need.
According to a recent Deloitte survey.
But Cramer thinks young people can do better investing some of their money, even if it’s just a few dollars.
“They seem to have a lot of money, even if they don’t have a lot of money,” says Cramer. He found that even though young workers often don’t have much earning power, they still spend a significant portion of what they earn on discretionary purchases.
“Young people have to learn to be more frugal,” he tells CNBC Make It.
In one example, Cramer said that young customers at the New York restaurant he owned spent money “as if it were growing on a tree.” He’s seen countless young professionals buy round to round of $14 margaritas in a day’s work, despite hearing their complaints about student loans, or not having enough money to take a vacation. retirement.
“On one hand, you’re allowed to have all the margarine you want. But on the other hand, you say, ‘I can’t invest, I have student loans,'” Cramer said. “I think that’s counter-intuitive. They have to change their minds.”
“I know you can say, ‘Oh, Cramer is rich; I don’t want to hear his lecture.” But do you live in your car on the side of Interstate 5? ‘ he asked, referring to his early 20s when he lived by his car.
Back then, when he was sleeping in his car, he still put $100 in a stock index fund every month, he said. Cramer maintained that throughout his 20s, investing more each month as his income grew. “I put that money away and it made me a millionaire,” he said.
“I’m not calling for something draconian. I’m not saying don’t hang out. What I’m saying is: Don’t spend money every week you shouldn’t have,” Cramer said.
Instead, he suggests putting some of that discretionary spending into monthly investments. You should start with small things, such as “the equivalent of going to two movies or a bottle of wine.”
“Just keep it consistent,” says Cramer. Over time, stocks have proven to be an incredible asset.
Investments in the stock market grow at a rate about 10% per year before factoring in inflation, and the longer you hold the investment the more it grows – another reason to start while you’re young.
“People always say, ‘I don’t have anything to invest, so I can’t invest.’ I always hear that from people in their 20s,” Cramer said. But if you have a few dollars to spend when you go out, then you have money to invest, he argues.
“People have a million reasons why they don’t want to be rich.”
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