Once the paint on the pumpkin is dry, use a knife from a pumpkin carving kit ($7, Amazon) to cut out the shapes of the stencil. Tape your template to the pumpkin, then use a pencil to draw the shapes on the pumpkin; you'll paint or cut these later. Then, use an awl ($4, Amazon) or a thumbtack to poke holes along the sugar skull pumpkin carving lines.
Remove the stencil and carve along the dotted lines, pushing all the pieces out as you go. Wipe the surface of the pumpkin to remove any dust, then use a small brush to paint the remaining shapes with bright colors.