You will need these things:
1) A picture to hide stuff in
2) Files to be hidden
3) A file compression software (I use 7-zip, which you can get here)
4) Command Prompt
You can not only hide files in pictures, but music files, videos, and just about anything else.
Step 1: Compressing the Files
Step 2: Making a Zipped File
Open your file compression software, and navigate to the folder you made. Make the files that will be hidden into a zipped file, and name it something simple, like "x".
I now have, in the "x" folder, a picture named "Picture.png" and a compressed file called "x.7z".