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) -- "Tonight is all about the big picture," Jim Cramer said on

"Mad Money"

as he dedicated the entire show to building wealth and learning how to augment your income, not just for a year or two but for the rest of your life.

Cramer said it's fruitless to think you can invest in stocks without a solid foundation for building long-term wealth beforehand. Having a good foundation is essential in a culture that doesn't teach financial literacy, he said.

Before investing in stocks, Cramer said there are three things all investors must do. First, they must pay off all their credit card debt. Even the best of stock market gains will have a hard time competing with the 15%, 20% or 30% you're paying in credit card interest.

Second, Cramer said every investor must have health insurance. Starting in 2014, Obamacare mandates penalties for not having health insurance, so every investor needs to get on board.

Last but not least, Cramer said that every investor must have disability insurance. Without both health and disability insurance, he said, investors can get wiped out in an instant. That's why all three of these items are must-haves before considering investing in the stocks.

Get Prepared

Cramer's next step for building long-term wealth is preparing for retirement, preferably if you're in your 20s and have just started working. He said that planning for retirement involves a lot more than just blindly putting a little money away in an Individual Retirement Account or a 401(k) -- it involves having an active hand in both how much you save and where it goes.

That's not to say investors shouldn't invest in an IRA and 401(k), he said. They should, but there's a lot more to it than just having an automatic deduction from your paycheck. Cramer one again preached the values of staying diversified, at least as much as your 401(k) will allow you to be.

Cramer also warned that 401(k) savings should never be concentrated in your employer's stock. As anyone from the dot-com collapse will tell you, investing only in your own company can be deadly. The collapse of


is another perfect example of what can go wrong if you're not paying attention.

Slow and Steady

Getting rich quick is always alluring, said Cramer, but in fact the best way to build wealth is not overnight, it's slowly and carefully over time. That's why accounts like IRAs and 401(k)s should always be your first line of offense. Their tax-deferred nature and employer contributions may seem small and insignificant now but over time they'll add up big.

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Cramer said it's also possible to be too cautious, too prudent and too risk-adverse. You should invest for retirement, he continued, not save for it. Savings implies just socking money away in something with a low return. Unfortunately, that strategy rarely works.

When saving for retirement, many investors may think bonds are the way to go since they afford less risk. But loading up on bonds in your 20s, 30s and 40s because you fear risk will never allow you to generate enough money to live comfortably. It's not enough to rely on a 3.9% Treasury bond, because those vehicles rarely keep up with inflation, let alone allow you to get ahead of the curve, Cramer advised.

Adjust as Necessary

So investors have their credit cards paid off, they have health and disability insurance, they're contributing to their 401(k)s and they've decided to take on a little risk and invest in stocks rather than bonds. Now they'll get rich, right? Well, not quite.

Cramer said conventional wisdom will tell you to just passively have a percentage of your paycheck sent to your 401(k) every month. But if you think about it, that doesn't really make a lot of sense. After a big market rally, when stocks are expensive, ideally you'd want to invest less that month. Conversely, after a big market selloff, you'd ideally want to back up the truck and buy all you can.

Cramer said any time the

S&P 500

falls by 10%, investors should be doubling down and buying twice what they normally would. Will this strategy make a big difference over four or five years? Probably not, he admitted. But over 40 or 50 years, this alone could mean tens or even hundreds of thousands of extra dollars in your account.

"That," Cramer said, "is the right way to manage your retirement portfolio."

Take Control

For as great as 401(k) accounts can be, however, Cramer said they do have plenty of downsides. First, many have high management fees and administration costs that eat away at your savings. But more important, they lack a choice in investment options and that means a big loss of control.

Investors ideally want a well-diversified portfolio of individual stocks, said Cramer, and 401(k)s just don't offer that level of granularity. Fortunately, IRAs do, which is why Cramer recommends only investing in a 401(k) plan to meet the employer's match, then putting as much as you're eligible for into an individual IRA, which you can control.

The limits on individual IRAs are $5,500 a year if you're under 50 and $6,500 a year if you're over 50, an investment that's definitely worth making.

To watch replays of Cramer's video segments, visit the Mad Money page on CNBC


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-- Written by Scott Rutt in Washington, D.C.

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At the time of publication, Cramer's Action Alerts PLUS had no position in stocks mentioned.

Jim Cramer, host of the CNBC television program "Mad Money," is a Markets Commentator for, Inc., and CNBC, and a director and co-founder of All opinions expressed by Mr. Cramer on "Mad Money" are his own and do not reflect the opinions of or its affiliates, or CNBC, NBC Universal or their parent company or affiliates. Mr. Cramer's opinions are based upon information he considers to be reliable, but neither, nor CNBC, nor either of their affiliates and/or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. Mr. Cramer's statements are based on his opinions at the time statements are made, and are subject to change without notice. No part of Mr. Cramer's compensation from CNBC or is related to the specific opinions expressed by him on "Mad Money."

None of the information contained in "Mad Money" constitutes a recommendation by Mr. Cramer, or CNBC that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. You must make your own independent decisions regarding any security, portfolio of securities, transaction, or investment strategy mentioned on the program. Mr. Cramer's past results are not necessarily indicative of future performance. Neither Mr. Cramer, nor, nor CNBC guarantees any specific outcome or profit, and you should be aware of the real risk of loss in following any strategy or investments discussed on the program. The strategy or investments discussed may fluctuate in price or value and you may get back less than you invested. Before acting on any information contained in the program, you should consider whether it is suitable for your particular circumstances and strongly consider seeking advice from your own financial or investment adviser.

Some of the stocks mentioned by Mr. Cramer on "Mad Money" are held in Mr. Cramer's Action Alerts PLUS Portfolio. When that is the case, appropriate disclosure is made on the program and in the "Mad Money" recap available on The Action Alerts PLUS Portfolio contains all of Mr. Cramer's personal investments in publicly-traded equity securities only, and does not include any mutual fund holdings or other institutionally managed assets, private equity investments, or his holdings in, Inc. Since March 2005, the Action Alerts PLUS Portfolio has been held by a Trust, the realized profits from which have been pledged to charity. Mr. Cramer retains full investment discretion with respect to all securities contained in the Trust. Mr. Cramer is subject to certain trading restrictions, and must hold all securities in the Action Alerts PLUS Portfolio for at least one month, and is not permitted to buy or sell any security he has spoken about on television or on his radio program for five days following the broadcast.