Jim Cramer’s guide to investing: Lessons for young people

CNBC’s Jim Cramer said it’s never too early to start thinking about investing. Young people, even those just out of college, should be thinking about their monetary future, according to Cramer.

“First, foremost and always, you need to invest,” Cramer said. “That’s the only way you’re gonna be able to achieve financial freedom, and by freedom, I mean living a life where you’re not totally dependent on the next paycheck.”

Cramer’s first piece of advice is to pay off any credit card debt you may have before you invest and make sure to keep paying that balance in full every month. Credit card debt can be onerous for anyone, he added, especially if you’re trying to save.

Another key element of Cramer’s guide to investing: save. Not everyone has an inherent disposition to save, Cramer acknowledged. Investing in the stock market can be more fun than a traditional savings account or certificate of deposit, he suggested. Funding a retirement account such as an IRA or a 401(k) is another approach to saving, Cramer added.

Younger investors can afford to take more investment risks than older investors, Cramer added. The closer you are to retirement, the more conservative your investing should be — fewer speculative stocks and more bonds and high-yielding stocks, he said.

“For young people just out of college, investing is a great way to trick yourself into saving money you might otherwise spend,” Cramer said. “Beyond that, remember: when you’re young, you can afford to take a lot more risks with your portfolio. And it’s never too soon to start contributing to your 401(k) or IRA, especially an IRA that’s a Roth.”