Jim Cramer's 3 tips for investors who are just starting out

Jim Cramer knows from being broke, but he sees no reason why you should.

"They say money can't buy happiness, but I've always found that piece of cliched conventional wisdom to be dubious at best since being broke is a major buzzkill, as I know first-hand from the time I spent living in my '78 Ford Fairmont," the "Mad Money" host said.

For younger investors who are trying to take an active hand in managing their money, the first step in achieving financial freedom is to invest. It's the only way to creating a life that isn't completely dependent on a paycheck, Cramer says.

Adam Jeffery | CNBC

Jim Cramer on Mad Money.

The good news about being a young investor, is that they have time on their side. Cramer has found that too many people begin saving and investing late in life, which could limit the risk one can take. So for those looking to get involved with investing, Cramer shared three tips for young investors.

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However, there is a caveat. You must pay off credit card debt. It doesn't matter how much money you make in the stock market, that interest you are paying on a credit card will eat away at your returns and may be more than the profits you make.

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Tip No. 1: Invest your savings

Cramer thinks the stock market is a great way to trick investors into saving money they might otherwise spend.

"Investing in stocks can be a lot of fun, whereas leaving money in a savings account or certificates of deposit feels really joyless for a lot of people. Not to mention the fact that their returns are so small, they're basically meaningless," he said.