Jim Cramer talks about why Gen Z has no excuse not to invest their money

Jim Kramer, host of CNBC’s “Mad Money” and investment clubbelieves that while Gen Z faces financial challenges, many of its members also spend a lot of money on things they don’t need.

Nearly half of Generation Z adults — currently ages 18 to 24 — say they live with paycheck to paycheck, according to Deloitte’s latest survey.

But Cramer thinks young people can do a better job of investing some of their own money, even if it’s just a few dollars.

“They seem to have a lot of money, even when they don’t have a lot of money,” Kramer says. He has observed that while young workers usually do not have much earning power, they still spend a large portion of what they earn on discretionary purchases.

“Young people should learn to be more economical,” he told CNBC Make It.

In one example, Cramer says that younger customers at his New York restaurant spend money “as if it were growing on a tree.” He’s seen countless young professionals buy round after round of $14 margaritas after a day’s work, despite hearing their complaints about student loans, or not having enough money to retire.

“On the one hand, you’re allowed to have all kinds of margaritas you want,” Kramer says. “But on the other hand, she says, ‘I can’t invest, I have student loans.'” I think that’s counter-intuitive. They have to change their thinking.”

“I know you might say, ‘Oh, Kramer goes rich, I don’t want to listen to his lecture. “But did you live in your car on the side of Interstate 5?” he asks, referring to the time he lived outside his car in his early twenties.

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At the time, when he was sleeping in his car, he still put $100 in a stock index fund every month, he says. Kramer kept that up throughout his twenties, investing more each month as his income increased. “I put that money away, and it made me a millionaire,” he says.

“I’m not asking for something too harsh,” Kramer says. “I’m not saying don’t go out. What I’m saying is: Don’t spend money every week that you shouldn’t have.”

Instead, he suggests putting some of that discretionary spending into investments each month. It’s okay to start small, like “the equivalent of going to a couple of movies or a bottle of wine.”

“Just keep it steady,” Kramer says. “Over time, stocks have proven to be incredible assets.”

Stock market investments are growing at a rate About 10% per year Before you factor in inflation, the longer you hold an investment, the more it can grow — another reason to start young.

“People always say, ‘I have nothing to invest, so I can’t invest.’ I hear that from people in their twenties all the time,” Kramer says. But if you have a few dollars to spend abroad, you’ll have money to invest, he argues.

“People have a million excuses why they don’t want to get rich.”

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