Open the image you want to use, or create a new document. If you’re starting a new image, let’s give it some color by making a diagonal gradient with the Gradient tool (see example). Using the Lasso tool, create a semi-round selection with jagged edges: to make it more realistic, drag the lasso tool slowly while moving your hand up and down, left and right.
Switch to Quick Mask Mode and use Filter » Pixelate » Crystalize with setting of 3.
Switch back to Standard Mode and save the selection (Select » Save Selection). After pressing OK, fill the selection with white (Edit » Fill) or whatever other color your heart desires. Then choose Select » Modify » Expand. You can enter 4 or 5 (depending how big edge you want). Now, switch to Quick Mask Mode again and choose Filter » Blur » Gaussian Blur with setting of 3.
Now, go back to Standard Mode and choose Select » Load Selection and make sure your saved selection (should be called Alpha 1 or #4) is selected in the Channel dropdown. Check Subtract from Selection and press OK.
Time for some color! Choose, Image » Adjust » Hue/Saturation and click the Colorize check box. Set the Hue to 14, Saturation to 31 and Lightness to -61 (or adjust to your preference).
And there you have it.