Choose two pieces of felt to make up the body of the bag, and some ribbon to be used for handles. Make sure to have a sewing kit with matching or complementary colors of string so that the stitching will hold together well with the ensemble you are creating.
Thread the needle by taking one piece of string and drawing it through the eye. This may take a few tries. After the thread is through, pull twice as much string as you think you will need, based on the size of the felt bag.
Next, lay the two pieces of felt on top of one another so that all the ends match up, and stitch together three of the four sides. This can be done with the running stitch(Embroidersguild.com), where the thread is knotted at the bottom of the string and the needle comes up through the two layers before going back down about two centimeters away. This pattern continues throughout the three sides. When you are ready to finish the stitching, cut the string on the same side that the initial knot was, and tie another knot. Double or tripling this step would be useful to ensure the strength of the felt bag on a whole.
Attach the ribbons by cutting two small horizontal holes on each piece of fabric. Take two long pieces of ribbon and run each through the holes on one side of the felt bag. These will be the handles.
Take the bag and flip it inside out so that the stitching doesn't show. Add other decorations to taste. This can be as simple as gluing on more ribbon, or adding beads and other accessories.