What you will need:
Letters (wood, metal, plastic, card board or whatever you got)
Buttons / Rhinestones / Decorative items
Glue / Mod Podge
Start by painting your letters the color of your choice.
Arrange the decorations in a mock fashion so you can make changes if it does not look good.
Glue decorations in place and then add hooks to back.
Hang or place letters.