Record your music and save it as a WAV file. Then just add it to your video project by using the Add Media button in the upper left of the program.
Meantime, if you need some help with the basics, you may want to check out my free 8 part Basic Training tutorial series.
You can use 'Narration' to record your own audio. Following are the steps for it:
1. Open Premiere Elements and click on the right panel.
2. Look for Tools. Select Audio tools from it.
3. Select Narration and record your audio
To add any audio to your video clip, do the following:
1. Import the video clip on timeline.
2. Right click on the video clip, select 'Delete Audio'
3. Now add/import your own audio to this audio track