This is a guest post from Suzanne S.

I’m English and live in California. My goddaughter recently graduated in England (with a degree in Art). I’m one of those who regrets not starting off with good financial habits when I was younger. I thought I would write her a letter giving her the advice that I wish someone had given me when I graduated.

I would love the perspective from Get Rich Slowly readers on whether they have tried to do the same with someone younger or whether they were the beneficiary of advice from someone else. What worked? What resonated? What failed dismally? Here’s what I have for her so far (with thanks to Plonkee from Plonkee Money for her UK insight).

Dear Goddaughter —

You did it. You graduated. Just as you’ve entered ‘The Real World,’ I’ve stepped into my 40s. And let me tell you, I’m kicking myself about a few things I could have done differently when I was your age. Now that you’re no longer a student, I want to share with you some of the things I wish someone had told me. Consider this my graduation gift to you. Hopefully, it will prove more valuable than any check I could have written.

1. Debt is your enemy. If you don’t have the money, don’t buy it. When you are younger, you think you have all the time in the world to pay things off. It’s much more fun to get what you want now — new car, the latest electronics, new clothes — and then pay for it later. Life is all about socializing and it’s easy to ignore how the drinks, nightclubbing and dinners add up.

My parents set a good example and taught me to live within my means. I was pretty good about this apart from one memorable exception. When I was living in Australia, my two girlfriends were planning a trip to New York and London over the Christmas holidays. I really wanted to go but didn’t have the money. So, what did I do? I took out a bank loan. I kid you not. I had an amazing trip, told myself that the clothes I bought at bargain prices were “investments” and lived the high life. I was lucky in that it only took me eight months — eight painful months — to pay off the debt. I was also lucky that I learned my lesson from this one experience and did not get sucked into more debt.

Debt is your enemy because it’s a trap. It’s hard to get out of it. If you can only afford to pay the minimum balance, debt can very easily spiral out of control. It can take away your freedom to make the best decisions for yourself.

If you are one of the 50,000 students who graduated with debt in the UK in 2007, do everything you can to get out of it fast. According to reports, students are facing an average “debt sentence” of 11 years, and 35% will postpone starting a family, marriage, or buying their own home by an average of six years.

2. Time is your friend (for now). In your early 20s, it’s hard to think about retirement. That’s a lifetime away. But right now, you have a unique chance — one that is weakening a tiny bit every year — to take advantage of a miracle. It’s called the Miracle of Compound Interest. This is a fancy financial term for saying that when you save your money in an interest-bearing account, you not only earn interest on the money you save, but over time you also earn interest on the interest paid in previous months and years. Your money increases exponentially. In fact, your money is working for you.

But to get maximum benefit from this financial miracle, you need to start saving as soon as possible. Like now. As this is a miracle, there’s another positive aspect of it. If you start now, you don’t have to save a lot each month. In fact, it can be just a small amount. Something that you’re not even going to notice missing from your budget. Say £14 per week. That’s just £2 per day — will you really miss that?

But the longer you leave it, the more you will have to put away later to reach the same financial target. A LOT more. And that’s much harder to do when you’ve got the mortgage, the kids and other ‘grown-up’ expenses.

Start now. Open a savings account and set up an automatic deduction so you don’t even notice it happening. Whatever amount you decide to save each month, I’ll match you for the first month so you’ll double your money. Check out the online banks as they often have the best rates.

3. Don’t spend more than you earn. I told you that Mum and Dad taught me to live within my means. Well, that helped me avoid debt apart from that one trip. What it meant though, was that I happily spent ALL my money every month. I was essentially living paycheck to paycheck. It was only when I had a specific goal (for example, when I saved up enough money to go traveling for six months with my husband-to-be), that I cut back. Big mistake.

It’s not enough to just stay out of debt. I should have been saving some of my money every month as soon as I started my career. Automatically.

You need to be saving for more than retirement. How about the deposit on a house? Or a new car? There’s also the very important emergency fund. A few years ago, I had to let go a work colleague in her 20s. She had just signed a year-long lease on her apartment, had no savings and was in tears, asking me what to do. Your emergency could be as dramatic as a job loss or as mundane as a broken fridge. But it makes all the difference to know you have some money set aside to help you through without resorting to debt.

4. Don’t wait until you find your true love to grow up financially. In retrospect, I think I subconsciously was waiting until I got married before getting serious about personal finance. I remember contemplating in my late 20s about whether I should buy a house but I wasn’t sure if I would stay in Australia. It all depended on whom I married. So, I just lived day to day without establishing a strong financial base for myself. I wish I had built my savings as that would have set me up better for life, whether I was single or married.

5. Educate yourself about personal finance. Sadly, I used to skip over the financial stories in the media. Now I read them voraciously. Get started by reading a personal finance book. (“Love Is Not Enough: A Smart Woman’s Guide to Making (and Keeping) Money” by Merryn Somerset Webb or “The Money Diet: The Ultimate Guide to Shedding Pounds Off Your Bills and Saving Money on Everything!” by Martin Lewis might be coming to you for Christmas…) Check out the British personal finance blogs. (For example, Plonkee Money, Money Watch, and Simple Pound.) Build your knowledge base so you can make better decisions about your financial life.

Consider these tips the building blocks to your financial future. Start out with these and see the difference it makes to your bank account and life in general.

Lest you fear that I’m recommending you turn into some kind of Scrooge, counting every penny and being miserly, I’m not. As in many things in life, you want to find a balance between spending and saving. Continue to grab every opportunity to travel while you can (and if you can afford it). Enjoy life to the fullest. Just make sure that you don’t have a price to pay later.

Your loving Godmother — Suzanne S.

Have you written a similar letter before? How well was the advice received? Do you have tips for Suzanne that can help her improve her message?