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Jim Cramer: ‘Younger people have to learn to be more frugal’—and watch those $14 margaritas.

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Cramer thinks that while Gen Z faces financial challenges, many of its members also spend too much money on stuff they don’t need.Nearly half of adults belonging to Generation Z — who are currently ages 18 to 24 — say they live paycheck to paycheck, according to a recent Deloitte survey.

But Cramer thinks young adults can do a better job investing some of their money, even if it’s just a few dollars. “They seem like they have a lot of money, even when they don’t have a lot of money,” says Cramer. He has noticed that while young workers don’t usually have a lot of earning power, they still spend a significant portion of what they earn on discretionary purchases.

“On the one hand, you’re allowed to have all the margaritas you want. But on the other hand, you say, ‘I can’t invest, I have student loans,’” says Cramer. “I think that’s counterintuitive. They have to change their thinking.”

Back then, when he was sleeping in his car, he still put $100 into a stock index fund every month, he says. Cramer kept that up throughout his 20s, investing more each month as his income increased. “I put that money away, and it made me a millionaire,” he says.
Jim Cramer: ‘Younger people have to learn to be more frugal’—and watch those $14 margaritas.

Instead, he suggests putting some of that discretionary spending into investments every month. It’s OK to start small, such as “the equivalent of going to two movies or a bottle of wine.”

Stock market investments grow at a rate of about 10% per year before factoring in inflation, and the longer you hold the investment, the more it grows — another reason to start when you’re young.

“People always say, ‘I have nothing to invest, so I can’t invest.’ I hear that from people in their 20s all the time,” says Cramer. But if you have a few bucks to spend going out, then you have money to invest, he argues.

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