Stencils and templates work fine as guides for scrollsawing 1"-or-larger letters, but not so well for smaller letters, if you can find them.

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Accurately marking smaller letters with a pencil and following those layout lines with your scrollsaw can prove taxing.Purchase vinyl press-on letters from office-supply or art stores. The letters are very inexpensive and come in many different sizes, styles, and colors. Once applied to the wood, your scrollsaw blade can follow the outline of these letters easier than you can split a pencil line. To remove the vinyl, gently lift the letters with an X-acto knife, or sand the surface of the letters after mounting them to a workpiece.
—Dick Foxworthy, Widefield, Colo.