Right after typing "cheerful" with the text tool still in use you should be able to drag over the text and highlight it like you would in any document. Look at the toolbar at the top and there will be a box where you can select your text color.
If you want the word to look wavy the simplest way* to do that is select the text layer, go to the Type menu (at the top of the screen), and then go to Warp Text. A dialog box with warp settings will appear.
- A better way is to create a path with the pen tool and then type on the path so the letters don't get distorted. If you've learned about the pen tool already you could do it that way.
If you already rasterized your text layer and you don't want to start over you can select the pixels by right clicking the layer (make sure your cursor is over the layer thumbnail) and go to Select Pixels. Then you can paint in the color you want.