Barefoot Investor Scott Pape warns Aussies to do four things this Christmas: Read his very surprising advice

Bestselling finance advice author Scott Pape is urging Australians to forget about the cost of living crisis on Christmas Day and spend big on a lavish meal with loved ones.

The year about to end has been a difficult one for borrowers, with the Reserve Bank in November putting up interest rates for the 13th time in 18 months, taking the cash rate to a 12-year high of 4.35 per cent.

Inflation has moderated from a 32-year high of 7.8 per cent but October's monthly reading of 4.9 per cent was still well above the Reserve Bank's 2 to 3 per cent target.

But Pape, better known as the Barefoot Investor, said Christmas should be a time to forget about the cost of living crisis and not be too concerned about overspending on that one day of the year, even as borrowing costs surged at the fastest pace since 1989.

To achieve this, he suggested those struggling to afford presents instead put resources into making Christmas Day special, so the children remembered a happy day instead of their parents being stressed. 

'First, don't be a tight-arse this Christmas,' he said.

'It's been a tough year. Life is for living, so spend lavishly on nice food and booze (or mocktails for us teetotallers).

'You'll get a similar dopamine rush anticipating and enjoying a nice spread than you will from that soap-on-a-rope gift set. So go all out on the Christmas pudding.'

Christmas is also a particularly hard time for young people hoping to buy their first home with Sydney's median house price soaring by 12.5 per cent since January, to an even more unaffordable $1.397million, despite the aggressive rate rises.

But Pape said thinking about that would only make things worse. 

'Second, don't focus on the economy, or house prices, or interest rates, or your boss – you have no control over any of that,' he said.

'Instead focus on what you can control, and take some small but decisive steps to build your confidence and control.'

His advice coincided with a new Compare the Market study showing younger people, born from 1981 onwards, were the most concerned about the cost of living crisis, with 68.2 per cent of Millennials aiming to save more in 2024, compared with 76 per cent of Gen Z consumers born since 1997.

Australians aged 43 and up were less concerned with only 46.4 per cent of Generation X planning to save more, with only 24 per cent of Baby Boomers having that goal.

Australia's national vacancy rate is also at a very low 1.1 per cent, with immigration at record levels.  

A survey of 1,000 renters by InfoChoice found 60 per cent of them had spent less on Christmas gifts because of rising rents, while 13 per cent could not afford presents, and three did not even have the money for a Christmas tree.

Christmas gift recommendation 

But with Christmas less than a week away, Pape recommended The Coming Wave: Technology, Power, and the Twenty-first Century's Greatest Dilemma by Mustafa Suleyman, who founded an AI company bought by Google.

Pape, Australia's bestselling author during the 2010s, said the book by DeepMind's founder was stressful reading.

'So this one comes with a warning: it totally stressed me out,' he said.

'And not just me. A member of my unofficial book club told me he couldn't get past the third chapter: 'It was just too scary, I couldn't cope'.'

Suleyman founded DeepMind Technologies, a London-based AI research company, in 2010 before selling it to American tech behemoth Google in 2014 for $US486million - or a bit more than $A500million back when the Australian dollar was worth more than 90 US cents.

Pape said Suleyman had authority predicting what AI could do.

'Suleyman isn't some blow-hard author trying to sell some books by frightening the pants off us,' he said.

'He's totally got the chops, having co-founded one of the world's most successful artificial intelligence (AI) companies, Deepmind Technologies.'

Suleyman's book, co-written with Michael Bhaskar and published by Penguin, predicted a future where AI could even make you rich. 

'AI is going to fundamentally change the world, and sooner than we think,' Pape said.

Pape was particularly impressed with the 'litmus test' for AI 'which is to give it the instruction to 'make me $1million selling stuff on Amazon'. 

The book told readers about how an AI bot would 'scan Amazon for the most profitable products, have it made in China, list it online, write all the ad copy, manage fulfilment and customer service … and then deposit $1 million into your bank account. Crazy, huh?'.

Unlike humans, AI would be resistant to alcoholic temptations as it came to dominate our lives. 

'In the coming decade AI will infiltrate our lives, driven by the fact that it will get smarter and faster, and it won't get drunk and make an arse of itself at the office Christmas party,' Pape said.

'This bloke knows what's coming down the tunnel. Read it to find out what (maybe) happens next.'

Suleyman's predictions are beyond what ChatGPT is now capable of as an AI program that can scan thousands of pages of text and come up with a concise summary.

Existing large language models are expected to do white collar jobs, from junior paralegal work at law firms to consultancy work now done for public service departments. 

Unemployment in November was still low at 3.9 per cent but there are fears AI could replace jobs and make humans dependent on government welfare, leading to calls for taxes on AI beneficiaries to fund universal basic income.